The EU's new payment services directives PSD3 and PSR (Payment Services Regulation) are being introduced at a pivotal moment in the financial sector's transformation. Recent technological developments and shifting customer expectations create a need for new regulations that can better prevent fraud, further promote open banking, and foster competition. Companies are under pressure to innovate faster than ever, while demand for secure digital services grows by the day. It is therefore essential that organizations prepare for the changes PSD3 and PSR will bring and remain alert to ongoing developments in the sector.

Objectives of PSD3 and PSR

Although existing regulations such as PSD2 have proven effective in combating fraud, rapid technological advancements have created new challenges and opportunities. These developments require adjustments to regulations to ensure that payment services across Europe continue to meet evolving demands. The upcoming PSD3 and PSR framework aims to address these needs and provide a robust foundation for innovation in the sector. This will allow companies to manage new risks effectively while capitalizing on the opportunities brought by digital transformation.

Key improvements for customers

The new financial data-sharing legislation goes beyond just payment accounts and includes rules for safe and transparent data exchange. The aim is to stimulate innovation and give consumers greater control. These provisions are expected to be laid by both PSD3 and PSR as well as the proposed Financial Data Access (FIDA) framework.

Safe data sharing for customers

Consumers can more easily share their financial data for personalized services, financial insights, or price comparisons. Through specialized consent dashboards, consumers retain control over who can access their data and for what purposes.

Enhanced consumer control and accessibility

Consumers benefit from improved access to cash, including the ability to withdraw cash at retail locations without needing to make a purchase. Consumers gain stronger control over their payments, including tools to set limits on payment instruments.

New licensing requirements

With the introduction of PSD3 and PSR, the prudential and licensing rules for electronic money institutions and payment service providers become more stringent. These include:

Revised capital and safeguarding requirements

• Increased initial capital requirements: Institutions may need to hold more equity due to revised calculation methods.
• Wind-down plan requirement: Institutions must include an orderly wind-down plan in their license applications.

Risk mitigation

Payment institutions will be subject to stricter rules aimed at reducing concentration risk when safeguarding customer funds.

Re-licensing within two years

Existing licenses for non-bank PSPs remain valid for a maximum of 30 months, provided institutions submit new applications.