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PSD3: modernising payment services and opening financial services data


The European Commission (EC) has put forward proposals for bringing payments and the wider financial sector into the digital age.

Its new rules extend the scope of consumer protection and competition in electronic payments, and empower consumers to share their data securely, so they can access a wider selection of better and cheaper financial products and services. The EC says the proposals place consumers’ interests, competition, security and trust at their centre.

Electronic payments in the EU have grown continuously, reaching €240 trillion by 2021, up from €184 trillion in 2017 - a trend accelerated by Covid-19. New digitally enabled providers have entered the market as open banking allows banks and fintechs share financial data securely.

Meanwhile, more sophisticated types of fraud put consumers at risk and undermine trust. The EC’s new package responds by seeking to ensure the EU’s financial sector is fit for purpose and can adapt to the risks and opportunities that come with ongoing digital transformation.

The current Payment Services Directive (PSD2) will be updated to become PSD3, and a new Payment Services Regulation (PSR) will be implemented. This consists of a package of measures which aim to:

  • Combat and mitigate payment fraud by enabling payment service providers to share fraud-related information among themselves, increasing consumer awareness, strengthening customer authentication rules, extending the refund rights of consumers who fall victim to fraud, and mandating a system for checking the alignment of payees’ IBAN numbers with their account names for all credit transfers
  • Improve consumer rights in cases, for example, where their funds are temporarily blocked, improve transparency on their account statements, and provide more transparent information on ATM charges
  • Further level the playing field between banks and non-banks, in particular by allowing non-bank payment service providers access to all EU payment systems, with appropriate safeguards, and securing those providers’ rights to a bank account.