7 things to know about PSD3 and PSR

March 1, 2024

On June 28 2023, the European Commission put forward a set of proposals to bring payments and the wider financial sector into the digital age. 

The Third Payment Services Directive (PSD3) provides rules for the authorization of payment institutions, and the new Payment Services Regulation (PSR) incorporates elements from PSD2. Together, they effectively replace PSD2 and introduce revisions and improvements. 

The proposal has four main objectives:

  • Enhance security and consumer protection
  • Encourage innovation and competition
  • Harmonize rules across Europe
  • Support the ecological transition

Here are 7 things to know about PSD3 and PSR:

01 Improved open banking functionality

  • New data access interfaces
  • Emergency data access
  • Consent management dashboards
  • Increased access to financial data beyond only payment account data

02 Fraud mitigation

  • Make widely available a service to check whether the name of the payee and the bank account number match each other, before a transfer is confirmed
  • Give victims of fraud a right of refund by their bank or other PSP, in specific circumstances
  • Help banks and other PSPs cooperate against fraud through fraud-related information sharing
  • Oblige banks to improve customers' awareness about fraud

03 Fairer competition between banks and non-bank PSPs

Banks would have to provide bank account services to non-bank Payment Service Providers (PSPs), and these PSPs would be able to directly participate in payment systems throughout the EU.

04 Simplification and efficiency

Electronic money institutions (EMIs) are merged with payment institutions (PIs) under a single authority, and all payment rules applicable to PSPs will be contained in a directly applicable regulation.

05 Strengthened consumer rights

  • Enhanced account statement transparency
  • Clear and transparent information regarding ATM charges
  • Solutions to rectify problems with blocked funds

06 Improved payment experiences for consumers

  • Consumers can make electronic payments and transactions in the EU, domestically or cross-border, in euro and non-euro
  • Cash accessibility would be enhanced in stores and via ATMs

07 Mandatory instant transfers

Instant transfers and payments consume less energy and make it possible to transfer funds in only 10 seconds.

The takeaway for financial services providers?

The new set of proposals gives the financial services industry a new opportunity to innovate, differentiate, and offer better experiences for consumers. Being proactive about this update to PSD2 is the best way to rise to the challenge. 

Emmanuel Methivier, Business Program Director and French Catalyst at Axway

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