Banks and payment providers will need to adapt their systems and processes to comply with the requirements of the new EU Directive on Payment Services (PSD2), according to a new guide published by Deutsche Bank, in collaboration with PPI AG, that explains the directive’s most important provisions, as well as its impact on the operations of payment service providers and corporates.
Applicable from 13 January 2018, PSD2 is a major update of the EU’s first Directive on Payment Services, published in 2007, which laid the legal foundation for the creation of an EU-wide single market for payments. PSD2 aims to bring EU regulation up-to-speed both with the step-change in technological development and the shake-up of the payments market that have occurred since the first directive came into force.
It extends the existing directive’s scope to cover transactions in all currencies where both the payer’s and payee’s payment service providers (PSP) are located in the EU/EEA (two-leg-in), as well as to transactions where only one PSP is located in the EU/EEA (one-leg-out).
It introduces stricter safety requirements for accessing payment account information and for the initiation of payment transactions via online channels, mandating 2-factor authentication; and it extends market access to ̶ and control over ̶ third party providers of payment initiation and account information services.
“We welcome PSD2 as a further step in the development of the European payments market that will facilitate a completely new “innovation ecosystem” in payments in Europe” says Shahrokh Moinian, contributor to the new guide, Global Head of Cash Management Corporates, and Programme Lead of the PSD2 Implementation Project at Deutsche Bank. “It widens the scope of the existing directive by covering new services and players, as well as by extending it geographically and by currency. PSD2 will strengthen consumer rights and security as well as encouraging competition in the payments space”.
You can access the guide “Payment Services Directive 2: Directive on Payment Services in the Internal Market (EU) 2015/2366” here.