5 Things You Need To Know About PSD2

Speculation over the much anticipated PSD2 – revised Payment Services Directive – has been gathering for quite a while now. Last week the European Parliament adopted the revised Directive on Payment Services (or PSD2), and with it the PSD2 reality got a little bit closer. PSD2 has been attracting quite a lot of attention, and in and amongst  all of the talk about Directives and European Parliament votes its not always immediately clear what PSD2 actually is. The intention of this post to outline simply what PSD2 is, and why there is so much hype and excitement surrounding it.

1. It all started with the Directive on Payments Services (PSD)

The objective of PSD, adopted in 2007, was to create a single market for payments within the European Union. The legislation:

2. Then came PSD2 – the revised Payment Services Directive

The revised Payment Services Directive (PSD2 – EU Directive 2015/2366) was proposed by the European Commission in 2013, and the objective was to create a level playing field by:

3. Enough of the fluffy stuff – What is the big deal with PSD2?

The banks are all talking about PSD2 because it will require a lot of investment, reduce their existing revenue streams and introduce a whole wave of competitors. Check out the Starling Bank Explaining PSD2 for the juicy details. But in a nutshell…

4. Interesting.. What else will PSD2 bring?

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5. PSD2 – What happens next?

The proposals within the PSD2 have now been finalised by the European Parliament, and in the near future there will be a vote by the European Union member states to officially endorse the Directive. After this vote has taken place member states will have 2 years to introduce the changes into their own national laws


PSD2 – Disrupting Payments in Europe

Third party access to accounts (XS2A), the use of API’s to connect merchant and the bank directly and the ability to consolidate account information in 1 portal will undoubtedly disrupt payment services in Europe. Innovative companies will be eager to occupy this space and respond to consumer frustrations with existing incumbent providers. The challenge though, will be how consumers respond to new technology based providers and how these newcomers are able to meet the expectations of both the consumers and the European regulatory bodies. At the same time the newcomers must ensure the highest levels of security are implemented – after all they will potentially be handling YOUR payments and have access to YOUR account.

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