The Proposals of Revising the Payment Services Directive

The European Union (the “EU”) shall be revising the rules of the Payment Services Directive (the “PSD 2” or “Directive”) due to digital payment methods which have emerged since the last time the Directive was amended. The current version of the PSD is the second directive which regulates the payment services within the EU, the first being the PSD1 which was adopted in 2007.

On the 28th of June 2023, the EU Commission issued its proposals for the new revision which shall become PSD 3. Through these proposals, the EU will be ensuring that any new providers are on the same playing ground as existing ones. Along with the revised directive, there will also be the introduction of a new Payment Service Regulation. Together, they will increase effectiveness, efficiency, and transparency, allowing for more user protection.

The proposals came after a thorough evaluation that was carried out in 2022. The evaluation included advice from the European Banking Authority (the “EBA”), from a general as well as a targeted public consultation and an independent report.

The EU Commission has decided to propose amendments which shall:

  • Strengthen measures to combat payment fraud;
  • Allow non-bank PSPs access to EU systems with the appropriate safeguards and giving them a right to have a bank account;
  • Improve open banking;
  • Reinforce the enforcement power of national competent authorities and facilitating implementation of the rules clarifying various elements;
  • Further improve the availability of cash;
  • Improve consumer information and rights;
  • Merge the legal frameworks applicable to electronic money and to payment services.

The PSD 3 shall also establish clear rights and obligations to manage customer data in line with the General Data Protection Regulation.

The next step in the legislative process will now take place in the European Council and the EU Parliament.

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