The next-gen of PSD2 regulations has arrived

Frankie Elmquist
June 30, 2023
4 minutes

It’s here!

The European Commission published the final draft of next-gen PSD2 regulations this week. It expands upon the existing open banking regulations, standards, and mandates to keep pace with changing market and consumer needs.

The new package of regulations is comprised of three sets of proposals:

1. Payment Services Directive, version 3 (PSD3)
2. Payment Services Regulation (PSR)
3. Financial Data Access Regulation (FIDA)

The updates to Payments Service Directive (PSD3) measures will cover updates to the licensing authorizations. While the new Payment Service Regulations (PSR) will focus on improvements to the existing payment services regulations.

What’s the difference? Directives must be adapted into national legislation which leaves them open for interpretation. While regulations are firm measures that cannot be modified in any way by individual Member States. In other words, they are the rules. Why the change? To achieve a standardised set of rules across the EU and EEA, the rules must be applied in a uniform way. This will make payments system across Europe much more compatible which will improve customer experience and promote growth in the market.

The third set of measures will provide a new framework for responsible Financial Data Access (FIDA). These will set a clear set of standards around how and who can access financial data and for what purpose. Most importantly, it will provide the foundation for “open finance”- the next generation of open banking services which will make it possible for businesses and consumers to access personalized financial services that are better tailored to meet their needs.

The combined package is scheduled to go into effect in 2026.

Let’s take a look at the objectives each set of measures aims to achieve.

PSR and PSD3 Objectives

· Strengthening measures to combat payment fraud.
· Allow non-bank payment service providers (PSPs) access to all EU payment systems, with appropriate safeguards, and give them a right to have a bank account.
· Improve the functioning of open banking, especially as regards the performance of data interfaces, by removing obstacles to open banking services and giving consumers control over their data access permissions. 🙌 🥳️
· Reinforce the enforcement powers of national competent authorities and facilitate implementation of the rules by clarifying various elements.
· Further improve consumer information and rights.
· Improving the availability of cash.
· Merge the legal frameworks applicable to electronic money and to payment services.

Financial Data Access (FIDA) Framework Objectives

· Extend access to financial data beyond payment account data
· Give customers the right to give businesses access to their data to obtain services
· Provide common standards for access to customer data to support aggregation and sharing
· Strengthen management of data-sharing permissions and GDPR safeguards to support consumer trust
· Provide consumers and businesses access to an interface to control the use of their financial data

The proposals put improving customer experience and trust sharply in focus, which will surely support market adoption. They also put quite a bit of pressure on banks to remove access obstacles to key systems that are hindering non-bank PSPs, so there is sure to be some pushback as the draft moves toward becoming legislation in 2026. However, it also opens new opportunities for banks and PSPs to work together to create innovative new services that can generate new revenue models and increase customer loyalty.

So, stay tuned!

For more information, read What will PSD3 do?

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Neonomics AS is licensed as a Payment Institution (PI), Payment Initiation Service Provider (PISP) and Account Information Service Provider (AISP), issued by the Norwegian Financial Supervisory Authority (Finanstilsynet) passported across the EU.