The Second Payment Services Directive (PSD2) is a European Union (EU) regulation that aims to improve security, transparency, and competition in the electronic payments market. This directive came into force in January 2018 and establishes an “updated” regulatory framework for payment services in the European Union. Among the most notable points are the following:
Access to account information: PSD2 requires banks to provide access to their users’ account information to third parties (authorized providers such as financial technology companies) through secure APIs (application programming interfaces), which contributes to Open Banking. It is important to note that customers must give explicit consent for third parties to access their financial data.
Third-party payment service providers: PSD2 introduces two new categories of payment service providers:
- Payment Initiation Service Providers (PISP): These allow payments to be initiated directly from a user’s bank account without using a credit or debit card.
- Account Information Service Providers (AISP): These allow users to see all their banking information in one place, even if they have accounts at different banks.
Fraud reduction: Strict measures are taken to prevent fraud, such as requiring payment service providers to monitor transactions and report any suspicious activity. Obligations are also taken to protect sensitive user data and ensure that transactions are highly secure.
Increased transparency and consumer rights: PSD2 improves transparency regarding fees and conditions for payment services. For example, providers are required to inform their users/customers about any costs associated with payments. On the other hand, consumers have the right to compensation in the event of unauthorized payments, and the deadlines for the return of funds (in the event of errors) are stricter.
Regulatory technical standards (RTS): PSD2 includes regulatory technical standards that specify security and authentication requirements and payment service providers’ obligations regarding risk management.
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