What is PSD3?

Payment Services Directive 3

Why PSD3 Matters

PSD3 represents the next evolution of European payment regulation, responding to market developments, technological changes, and lessons learned from PSD2 implementation. The directive addresses persistent issues like inconsistent API access quality, rising payment fraud (particularly APP fraud), and the need for greater harmonization across member states. For payment service providers, fintechs, and banks, PSD3 will reshape compliance requirements, market access rules, and competitive dynamics in the European payments market.

Regulatory Implications

PSD3 introduces several significant regulatory changes:

• Unified authorization: PSD3 proposes merging payment institution and e-money institution licenses into a single authorization category, simplifying the licensing landscape.
• Enhanced open banking: Improvements to API access, including a dedicated open finance framework, permission dashboards for consumers, and measures to address API quality and availability issues.
• Fraud prevention: New measures to combat authorized push payment (APP) fraud, including IBAN-name verification, enhanced fraud data sharing between payment providers, and liability frameworks for fraud losses.
• Payment Services Regulation (PSR): Unlike a directive (which requires national transposition), the PSR is a directly applicable regulation, ensuring uniform rules across all member states.
• Consumer protection: Enhanced transparency requirements, expanded rights for payment service users, and new rules on fund safeguarding.

How PSD3 Relates to Compliance Monitoring

PSD3 is currently progressing through the EU legislative process, with the European Parliament and Council negotiating final text. Implementation timelines will become clearer as the legislation is finalized. For existing payment institutions and e-money institutions, preparation should begin now. RegPulse tracks every stage of the PSD3 legislative process and related regulatory developments, helping your team prepare for the transition.