TheRevised Payment Services Directive (PSD2,Directive (EU) 2015/2366,[1] which replaced thePayment Services Directive (PSD),Directive 2007/64/EC[2]) is anEU Directive, administered by theEuropean Commission (Directorate General Internal Market) to regulate payment services andpayment service providers throughout theEuropean Union (EU) andEuropean Economic Area (EEA). The PSD's purpose was to increase pan-European competition and participation in the payments industry also from non-banks, and to provide for a level playing field by harmonizingconsumer protection and the rights and obligations of payment providers and users.[3]The key objectives of the PSD2 directive are creating a more integrated European payments market, making payments more secure and protecting consumers.[4]
TheSEPA (Single Euro Payments Area) is a self-regulatory initiative by the European banking sector represented in theEuropean Payments Council, which defines the harmonization of payment products, infrastructures and technical standards (Rulebooks forcredit transfer/direct debit,BIC,IBAN,ISO 20022 XML message format,EMV chip cards/terminals). The PSD provides the legal framework within which all payment service providers must operate.
The PSD's purpose in regard to the payments industry was to increase pan-European competition with participation also from non-banks, and to provide for a level playing field by harmonizing consumer protection and the rights and obligations for payment providers and users.[3]The PSD's purpose in regard to consumers was to increase customer rights, guarantee faster payments (no later than next day since 1 January 2012), describe refund rights, and give clearer information on payments.[5] Although the PSD was amaximum harmonisation directive, certain elements allowed for different options by individual countries.[6]
The final adopted text of PSD went into force 25 December 2007 and was transposed into national legislation by all EU and EEA member states by 1 November 2009.[2][7]
The PSD contained two main sections:
Each country had to designate a "competent authority" for prudential supervision of the PIs and to monitor compliance with business conduct rules, as transposed into national legislation.[8]
The PSD was updated in 2009 (EC Regulation 924/2009) and 2012 (EU Regulation 260/2012). An implementation report from 2013 found the PSD facilitated "provision of uniform payment services across the EU" and reduced legal and production costs for many payment service providers and that "the expected benefits have not yet been fully realised". The same report found the 2009 update "to be functioning well. For example, charges for €100 transfers followed a further downward trend to €0.50 euro-area average for transfers initiated online and remained low, at €3.10 for transfers initiated at the bank counter".[9]
In October 2021 the EBA launched a public consultation on the amendment of its Regulatory Technical Standards (RTS) on strong customer authentication and secure communication (SCA&CSC) under the Payment Services Directive (PSD2) with regard to 90-day exemption from SCA for account access.[10] In the UK, the FCA published PS 21/19[11] (“policy statement”) for “Changes to the SCA-RTS and to the guidance in ‘Payment Services and Electronic Money – Our Approach’ and the Perimeter Guidance Manual” . This document proposed a number of modifications including to Article 10 of the UK- RTS, by replacing the requirement for the PSU to re-authenticate with their ASPSP every 90 days to allow AISP access with the requirement for the PSU to reconfirm their consent with their AISP directly.
On 8 October 2015, the European Parliament adopted the European Commission proposal to create safer and more innovative European payments (PSD2, Directive (EU) 2015/2366). The current rules aim to better protect consumers when they pay online, promote the development and use of innovative online and mobile payments such as throughopen banking, and make cross-border European payment services safer.[12]
Then-CommissionerJonathan Hill, responsible for Financial Stability, Financial Services and Capital Markets Union, said, "This legislation is a step towards a digital single market; it will benefit consumers and businesses, and help the economy grow."[12]
On 16 November 2015, theCouncil of the European Union passed PSD2. Member states then had two years to incorporate the directive into their national laws and regulations.[13] On 27 November 2017, Commission delegated Regulation (EU) 2018/389 supplemented PSD2 with regard to regulatory technical standards for strong customer authentication and common and secure open standards of communication.[14]
The EU and many banks pushed this development with the new Payments Service Directive 2 (PSD2), which came into force on 13 January 2018. Banks then adapted to these changes which opened many technical challenges, but also many strategic opportunities, such as collaborating with fintech providers, for the future.[15]
An important element of PSD2 is the requirement forstrong customer authentication on the majority of electronic payments.
Another important element of the directive is the demand for common and secure communication (CSC). eIDAS-defined qualified certificates for are demanded for website authentication and electronic seals used for communication between financial services players. The technical specification ETSI TS 119 495 defines a standard for implementing these requirements.
PSD2 went into full effect on 14 September 2019, but due to delays in the implementation, theEuropean Banking Authority allowed for a time extension of thestrong customer authentication (SCA) until 31 December 2020.[16][17]
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Privacy First, a privacy organisation, criticised theopen banking elements of the new legislation, claiming it focuses too much on improving competition and innovation while the privacy interests of account holders are overlooked.[19]
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