EC’s PSD3 proposals set to redefine EU digital payments and open banking


The EC has introduced its propositions for reforming the EU’s payments market, representing an upgrade to PSD2 which will become PSD3 once approved.

The objective of these proposals is to modernise the payments and wider financial sector, aligning it with the digital age.

The launch of PSD3 follows the continued growth of digital and electronic payments across the EU, a trend catalysed by the Covid-19 pandemic. Evidence of this trend is evident in the fact that the value of electronic payments soared to €240tn in 2021, up from €184.2tn in 2017.

The EC, through PSD3 and an additional Payment Services Regulation, aims to enhance consumer protection and foster competition, achieved by offering a broader choice of payment providers. The proposals include provisions such as a system to verify IBANs and a platform allowing payment service providers to exchange information related to fraud, bolstering consumer protection. In addition, FinTech companies will gain access to EU payment systems, subject to certain safeguards.

The proposed PSD3 will also establish common rules on open banking interfaces for data sharing and customer control over their data. Mairead McGuinness, commissioner for financial services financial stability and capital markets union, expressed that PSD3 will augment consumer protection and stimulate competition.

The industry has responded positively to the proposals, with the Open Finance Association’s chair, Nilixa Devlukia, stating that they are “very encouraged” by the EC’s PSD3/PSR proposal. She noted that it recognised the necessity to strengthen the open banking baseline and to enable the industry to collaborate on value-added services, thereby generating a return on investment for all parties.

Open Finance Association chair Nilixa Devlukia said, “We are very encouraged to read the Commission’s proposal for PSD3/PSR, which recognises the need to strengthen the free open banking baseline and to allow the industry to collaborate on value-added services which generate a return on investment for all parties. This approach, combined with the separate proposal for instant payments, will help enable open banking to grow into a seamless pan-European payment solution.”

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