The European Parliament has formally adopted the revised Directive on Payment Services, commonly referred to as PSD2. The new regulations are aimed at updating EU rules on payment services as new industry dynamics have changed the landscape. While the regulations cover a broad set of rules, some of the key areas include making online payments more secure by increasing data protection and liability rules for all online payment service providers as well as pushing more competition in the market by mandating the creation of bank APIs. Now with the Parliament’s vote secure, PS2 will be formally adopted by the EU Council of Ministers in the near future after which point EU member states will have two years to implement the legislation before the laws take effect.
Commenting on the new rules, MEP Antonio Tajani said,
“The EU payment services market remains fragmented and expensive, costing €130 billion, or over 1% of EU GDP, a year. The EU economy cannot afford these costs, if it wants to be globally competitive. The new regulatory framework will reduce costs, improve the security of payments and facilitate the emergence of new players and innovative new mobile and internet payment methods.”
While there are concerns among financial institutions around the cost and technical ability to implement these new rules, the regulations should be seen as an opportunity to upgrade and bring the next generation of payment and banking products to consumers rather than burdensome and an obstacle to growth.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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