- The Evolution of EU Payment Services Regulation: From PSD2 to PSD3 and PSR
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- The financial landscape is undergoing a profound transformation with the introduction of PSD3 (Payment Services Directive 3) and PSR (Payment Services Regulation). These groundbreaking regulations aim to harmonize the payments ecosystem, foster innovation, and enhance consumer protection while addressing the dynamic challenges of cybersecurity, digital identity, and cross-border payments.
- The PSD3 & PSR in Finance Summit 2025 in Brussels, the heart of European policymaking, will serve as a premier platform for regulators, industry leaders, fintech innovators, and stakeholders to explore the implications and opportunities of this transformative regulatory framework.
- The second Payment Services Directive (PSD2), formally known as Directive (EU) 2015/2366, marked a significant milestone in modernizing the EU’s payment services framework. Building on its predecessor, the Payment Services Directive (PSD1, Directive 2007/64/EC), PSD2 enabled innovation, enhanced competition, and strengthened consumer protection in the payments sector. However, the rapidly evolving payment landscape, marked by innovative payment solutions and increasingly sophisticated fraud mechanisms, necessitated further regulatory updates.
- In response, the European Commission introduced proposals in July 2023 for the Payment Services Directive 3 (PSD3, COM/2023/366) and the Payment Services Regulation (PSR, COM/2023/367), aiming to replace PSD2. These initiatives seek to address the challenges of the modern payment ecosystem while enhancing consumer trust and market efficiency.
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- Key Objectives of PSD3 and PSR
Combatting Payment Fraud
- Key Objectives of PSD3 and PSR
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- Recognizing the growing risks of payment fraud, the new framework emphasizes:
- Enhancing strong customer authentication (SCA) measures.
- Facilitating secure information sharing among payment service providers while adhering to data protection standards.
- Introducing extended refund rights for fraud victims.
- Mandating IBAN and account name matching for all credit transfers.
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- Enhanced Consumer Rights
PSD3 and PSR focus on:
- Enhanced Consumer Rights
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- Greater transparency in cross-border payments, especially concerning currency conversion charges and transfer timelines.
- Clearer identification of payees in account statements.
- Providing more straightforward ATM fee disclosures.
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- Advancing Open Banking
To streamline open banking processes:
- Advancing Open Banking
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- Payment account providers must introduce consumer dashboards to manage and revoke access permissions for open banking providers.
- Measures are proposed to ensure continuity for open banking providers during technical disruptions by allowing temporary use of alternative interfaces.
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- Levelling the Playing Field for Non-Bank Providers
Non-bank providers such as payment institutions (PIs) and e-money institutions (EMIs) often face hurdles in accessing bank accounts. PSD3 and PSR address this by:
- Levelling the Playing Field for Non-Bank Providers
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- Requiring banks to provide substantive justifications for account access refusals.
- oEstablishing smoother account access for non-bank providers.
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- Harmonization and Enforcement
To eliminate regulatory discrepancies across Member States:
- Harmonization and Enforcement
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- Certain provisions of PSD2 are shifted to PSR, which, as an EU regulation, imposes uniform rules directly applicable across the bloc.
- PSD3 consolidates the regulation of PIs and EMIs, simplifying licensing and supervision procedures.
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- The Scope of PSD3
PSD3 aims to consolidate the regulatory framework for PIs and EMIs, replacing PSD2 and the E-Money Directive (EMD2, Directive 2009/110/EC). Key changes include:
- A unified authorization process for PIs and EMIs, allowing PIs to offer e-money services.
- Alternative options for meeting initial capital requirements, such as €50,000 capital instead of professional indemnity insurance.
- Updates to safeguarding rules, including the option to secure funds in central bank accounts.
- Adjustments to capital requirements to reflect inflation.
- The Scope of PSD3
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- The Scope of PSR
As the first EU regulation directly applicable to payment services, PSR introduces updates to:
- The Scope of PSR
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- Transparency and information requirements for payment transactions.
- Strong customer authentication and exemptions.
- Operational and security risk management.
- Transaction risk analysis and obligations for all parties involved in payment transactions.
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- Impact on Existing PIs and EMIs
PIs and EMIs licensed under PSD2 or EMD2 will benefit from a 30-month grandfathering period following PSD3’s enforcement. During this time, they must align with updated criteria and seek reauthorization, unless their National Competent Authorities (NCAs) determine compliance through existing records.
- Impact on Existing PIs and EMIs
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- Timeline and Next Steps
The proposals for PSD3 and PSR are currently under review by the EU Council and Parliament, with deliberations expected to conclude by late 2024. Assuming an 18-month transition period, PSD3 and PSR are likely to take full effect by 2026.
- Timeline and Next Steps
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- Recent Developments, What’s Next?
As of November 2024, discussions are ongoing within the EU Parliament to finalize the regulatory text. Stakeholders, including consumer advocacy groups, financial institutions, and fintech companies, have expressed broad support for the proposals while urging clarity on implementation timelines and specific provisions, such as penalties for non-compliance and interoperability standards.This comprehensive update will pave the way for a more secure, transparent, and efficient payment ecosystem across the EU, fostering innovation while safeguarding consumer interests.
- Recent Developments, What’s Next?
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Why Our PSD3 & PSR Forum Is So Timely?
The PSD3 & PSR Forum comes at a pivotal moment as the EU payments industry prepares for sweeping changes under these new regulatory frameworks. The evolving landscape of payment services requires stakeholders to adapt swiftly to new compliance mandates, fraud prevention measures, and consumer protection standards.
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- Navigating Complexity:Our forum equips banks, Payment Service Providers (PSPs), and financial institutions with actionable insights to address emerging challenges, such as managing stronger customer authentication (SCA) requirements and integrating advanced fraud prevention systems.
- Fostering Collaboration:The event offers a platform to engage with regulators, innovators, and peers, enabling a deeper understanding of the operational, technical, and strategic implications of PSD3 and PSR.
- Driving Strategic Decisions:By participating, attendees will gain clarity on harmonized EU rules, facilitating better preparation for cross-border services, safeguarding funds, and achieving compliance with the enhanced transparency and consumer rights directives.
- Competitive Edge:Our forum provides exclusive updates on how open banking enhancements and a level playing field can be leveraged to create innovative payment solutions, ensuring businesses stay ahead of the curve.
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Europe’s Vision on the Future of Digital Payments
Europe’s ambitious vision for digital payments is centered on creating a seamless, secure, and unified payment ecosystem that fosters innovation while safeguarding consumer trust. PSD3 and PSR represent a significant stride toward this goal, addressing gaps in PSD2 and adapting to the digital transformation of financial services.
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- Enhancing Consumer Confidence:
With the implementation of stronger fraud prevention measures, extended refund rights, and improved transparency, Europe is prioritizing consumer trust in digital payments. This vision supports a thriving payments market where users feel secure in adopting digital-first solutions. - Empowering Open Banking:
By eliminating barriers to data sharing and mandating dashboard-based consent management, the new regulations aim to amplify open banking’s role in driving financial inclusivity and enabling data-driven innovation. - A Unified Payment Ecosystem:
PSD3 and PSR aim to harmonize rules across all EU Member States, reducing fragmentation and ensuring consistent enforcement. This unification eliminates inefficiencies, making cross-border payments smoother and more reliable. - Shaping Global Standards:
Europe’s proactive approach to payment regulations sets a precedent for other regions, establishing the EU as a leader in modern payment governance. These efforts position Europe at the forefront of shaping global standards for digital payments. - As the EU moves toward implementing these frameworks, their impact will ripple across the financial services industry, reshaping payment solutions, compliance practices, and consumer experiences for years to come.
- Enhancing Consumer Confidence:
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- Who Should Attend?
The summit is designed for professionals and decision-makers navigating the evolving regulatory landscape, including:
- Regulators & Policymakers: Shaping the framework for the next era of payments.
- C-Level Executives: CIOs, CTOs, and compliance leaders driving innovation and security.
- Fintech Innovators: Disrupting the market with cutting-edge solutions.
- Banking & Payment Providers: Adapting to the demands of PSD3/PSR.
- Cross-Industry Professionals: Retail, e-commerce, and other sectors integrating digital payments.
- Who Should Attend?
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- What Sets This Summit Apart?
The PSD3 & PSR in Finance Summit 2025 offers a unique blend of insights, actionable strategies, and networking opportunities:
- What Sets This Summit Apart?
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- Deep-Dive Panels
Explore regulatory nuances, industry challenges, and opportunities with leading experts. - Interactive Case Studies
Learn from real-world examples of PSD3/PSR implementations. - 1:1 Networking
Connect with peers, regulators, and solution providers. - Strategic Workshops
Address implementation challenges, compliance strategies, and emerging trends. - Key Takeaways for Attendees
- Deep-Dive Panels
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Participants will gain:
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- Regulatory Insights
A comprehensive understanding of PSD3/PSR and their implementation roadmap. - Actionable Solutions
Strategies to overcome challenges in fraud management, compliance, and innovation. - Collaborative Connections
Building partnerships across the payments ecosystem.
- Regulatory Insights
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