Practical analyses, checklists and whitepapers for banks, payment institutions and FinTechs
The European payments landscape is once again at a turning point. With the Payment Services Directive 2 (PSD2), key foundations such as Open Banking and Strong Customer Authentication (SCA) were introduced in 2018. In practice, however, implementation proved inconsistent:
Against this backdrop, the European Commission has proposed the Payment Services Directive 3 (PSD3) and the accompanying Payment Services Regulation (PSR). Unlike before, parts of the framework will now apply directly and uniformly as a Regulation across all Member States.
PSD3 and PSR now establish a uniform legal framework that will shape the payments landscape until 2027 – institutions should start preparing early.
With the third Payment Services Directive (PSD3) and the new Payment Services Regulation (PSR), the European Union aims to place the European payments market on a future-proof foundation. Unlike PSD2, the EU is now adopting a dual structure:
This marks a decisive step forward: national deviations and so-called “gold-plating” will largely be eliminated. Instead, a harmonised EU-wide framework will apply, creating fairer competition, fostering innovation and ensuring legal certainty.The reform package is not merely a response to the shortcomings of PSD2, but a fundamental realignment of the European payments market.
It clearly separates responsibilities between structure (Directive) and application (Regulation) – thereby strengthening the integrity of the Single Market.
With PSD3 and PSR, the EU is tightening requirements on security and transparency in payments. The goal is to strengthen consumer trust and make digital payments even more secure.
Explanation:
Strong Customer Authentication (SCA) will be further expanded and refined. Specific exemptions will be more clearly regulated, and requirements for accessible authentication procedures will increase. In addition, payment service providers will be required to provide more detailed information – for example on fees, currency conversions or payees.Stricter rules will also apply to pre-authorisations, such as at petrol stations or hotels, where blocked amounts will now be subject to clearer release requirements.
Action Required:
PSD3 addresses modern fraud schemes such as spoofing and social engineering much more rigorously. Institutions must implement new control mechanisms and collaborate more closely.
Explanation:
A central element is the mandatory verification of IBAN and beneficiary name in transfers to prevent manipulation. Institutions will also be required to enhance transaction monitoring and report anomalies at an early stage.The exchange of fraud data between payment service providers will be reinforced by regulation. In parallel, institutions will face greater obligations for customer education and staff training in fraud awareness.
Action Required:
A key element of PSD3 is the restructuring of the licensing regime. All payment institutions and e-money institutions will be required to renew their authorisation.
Explanation:
With PSD3, the previous E-Money Directive will be repealed and integrated into the new framework. Existing licences will no longer be valid. Institutions must undergo a new licensing process, which sets stricter requirements on governance, capital resources, outsourcing and IT security.The transition periods are tight – those who start early will gain a decisive time advantage.
Action Required:
PSD3 promotes greater competition by giving non-bank payment service providers easier access to essential banking services and payment systems.
Explanation:
In the past, banks often denied third-party providers access to accounts or payment systems. Under PSD3, banks will be required to clearly justify such decisions. Payment institutions will also have the right to appeal.This will reduce market entry barriers and foster innovation – particularly benefitting FinTechs and smaller providers.
Action Required:
The implementation of PSD3 and PSR follows a multi-stage roadmap. Even though the final texts are still under negotiation, a clear timeline is emerging:
Conclusion of EU trilogue negotiations, publication in the Official Journal.
PSR enters directly into force (6 months after publication), and Member States transpose PSD3 into national law (typically 18–24 months transition period).
All payment and e-money institutions must comply with the new requirements and, where applicable, undergo re-licensing.
The coming years will be decisive for payment and e-money institutions. Those who prepare early will gain a competitive advantage.
To support you, we have compiled in-depth analyses, practice-oriented whitepapers and up-to-date articles on PSD3 and PSR.
Whitepaper
The new requirements under PSD3 and PSR are fundamentally changing European payment transactions – with direct consequences for banks, payment institutions and e-money institutions. Our white paper provides a concise overview of the changes that are now imminent, the opportunities they present and how you can prepare your institution in good time.
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