A new milestone for open banking in Europe: PSD3 is coming

The PSD2 (Payment Services Directive), introduced in 2019, has opened the doors to a wide range of innovative digital financial services in the European Union. In recent years, the volume of electronic payments has increased significantly and the digitization of financial services has accelerated. This transformation offers many opportunities, but also many risks that could lead to a loss of consumer confidence. In response to these changes, the European Commission has developed a new PSD3 framework to modify PSD2 and fill its gaps. At the same time, as PSD2 has been interpreted differently across the European Union member states, reducing its effectiveness, the Commission has further proposed a new Payment Services Regulation (PSR) for more uniform and consistent application, directly applying to all Member States. PSD3 and PSR introduce comprehensive measures and goals based on the principles laid down by PSD2.

Consumer experience is a key to success

The primary aims of PSD3 include protecting consumers' rights and personal data. As the range of digital financial services expands, new types of fraud are appearing, which have a negative impact on the customer experience and can lead to customer mistrust of financial services. Under PSD3, the European Union is introducing stricter rules on Strong Customer Authentication (SCA) to prevent payment fraud. A name - IBAN verification service will be required, which means that the name and IBAN number of the beneficiary account holder will have to be checked before transactions are completed, i.e. that the name on the account and the name on the IBAN are the same. In addition, customers will be able to benefit from extended refund rights in the event of new types of fraud and payment service providers will also be able to share information on potential fraud and abuse on a voluntary basis.

Digitalisation in focus, but cash also gets attention

Thanks to the new directive, retailers will be able to offer cash withdrawal services without consumers having to make a purchase. Traders will not need to be specifically authorised to do this, but will be obliged to inform customers of the charges they will face. In order to ensure fair competition between retailers and ATM operators, the European Commission has set a cash withdrawal limit of €50 per ATM.

Dependence on banks leads to unequal competition

The number of non-bank Payment Service Providers (PSPs) has grown significantly in recent years, but the conditions of competition with banks remain uneven. One of the main reasons for this is that payment institutions (PIs) and electronic money institutions (EMIs) often do not have direct access to major payment systems. In order to reduce PSPs' dependence on banks and to create a level playing field, the new regulatory framework requires PSPs to have access to all EU systems and banks to provide PSPs with payment accounts, but only in seriously justified cases.

Development of open banking services

One of the aims of the PSD3 is to remove the obstacles that hold back the development of open banking. The regulatory regime states the need for a dedicated interface that complies with certain functional and technological requirements. Changes to the SCA are also expected, which will be a major change for Aggreg8 as an Account Information Provider. Our users will now only need to identify themselves with SCA when they want to access their account information for the first time, making it even more convenient for them to use our services. In current practice, this is required every 180 days, which is also a great improvement on the previous 90 days.

The proposals are expected to be finalised by the European Commission in 2024, after which Member States will generally have eighteen months to implement the new directive into national law, meaning that PSD3 and PSR are expected to be implemented by 2026.