2023. On 28 June 2011, the European Commission presented proposals to bring payments and the wider financial sector into the digital age, which will both amend and modernise PSD2, which will become PSD3, and introduce the Payment Services Regulation (PSR).

PSD3 will be broader than PSD2 and will cover most of its elements (e.g. transparency, liability, open banking), but will have more extensive Strong Customer Authentication (SCA) requirements than PSD2, and will set stricter rules on access to payment systems and account information. This will play a key role in protecting payment transactions and fighting payment fraud.

PSD3 will allow for more open banking, which will improve the competitive opportunities for payment service providers vis-à-vis banks and increase the range of services that payment service providers can offer, thus increasing their revenue potential. It is worth noting that the regulatory distinction between e-money institutions and financial institutions is expected to be abolished.

The main areas of the proposed PSD3 directive will be:

( 1 ) Regulatory framework for access to financial data

One of the key provisions of the proposal is that consumers can share their data with service providers (for example, with other financial institutions or fintech companies) in order to enable them to provide modern online services that help them with their personal finances. To do this, service providers will need to create a dedicated online platform where:

• on the one hand, consumers can explicitly provide their permission dashboard to share their data,
• on the other hand, the data must be made available to partners through the interface developed,
• thirdly, it must also ensure that the consumer can see the shared data at all times and manage his or her consent.

( 2 ) Fraud prevention

Payment service providers will be able to share information about fraud between themselves, strong customer authentication rules will be strengthened, the name and IBAN number of the beneficiary account holder will be required to be verified for transfers, and refund rights will be extended to victims of fraud.

( 3 ) Increasing market opportunities for payment service providers

The proposal states that payment service providers may enter certain regulated areas outside the activities set out in the PSD2 Directive, such as operating payment systems, but the handling of customer deposits remains a prohibited activity.

( 4 ) Completion of open banking

The scope of accounts subject to the open access obligation will be extended to all accounts that are capable of making daily payment transactions, i.e. sending and receiving funds – to which banks will have to provide access to PISP and AISP providers.

( 5 ) Regulatory categorisation of BNPL service

Under the package of proposals, BNPL will not be considered a payment service.

( 6 ) Possibility to withdraw cash from retailers

Retailers may offer cash withdrawal facilities to customers in shops, without the need for special authorisation or a contract with a bank, but they must inform customers of the conditions of these facilities in advance and may charge a service fee.

( 7 ) Legislative simplification

The proposal will bring electronic money institutions and payment service providers under a single regulatory package and regulatory structure.