PSD2 is certainly not a minor update of the original EU Payment Services Directive (PSD1) established in 2007. It brings three major changes to PSD1: it widens the geographical and currency scope of predecessor regulation; it introduces higher levels of payment security and authentication; and finally, and perhaps most disruptively, PSD2 licenses third party providers (TPPs) of payment services and obliges banks to provide them with the information they require to operate effectively.
The changes to the first directive are both logical and incremental. But, they have not proved popular. According to a PWC report released in the first quarter of 2016, 68% of bankers fear the effects of PSD2.
Payment service providers will admittedly have to undertake significant change-work to comply with the new directive, but, the directive is certainly not one to fear or resent. As Shahrokh Moinian, Deutsche Bank’s Global Head of Cash Management Corporates emphasises in Flow Magazine, financial service providers must change their attitude towards PSD2. PSD2 should be welcomed “as a catalytic force for heightened innovation, security and data transparency in the payment space”.
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