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PSD2 is the EU Payment Services Directive, which follows from the first Payment Services Directive (PSD) adopted by the EU in 2007. This bill created a single payment market in the EU to stimulate the creation of safer, more innovative payment services. PSD authors also aimed to make cross-border payments in the EU as simple, efficient and secure as payments within an EU member state.
The new EU Payment Services Directive (PSD2) entered into force on 13 January 2018[/B], introducing new laws aimed at improving consumer rights. If you want to provide payment services in the EU, this overview will be useful for you. However, some of the rules will not take effect until September 2019 at the earliest. Let's take a quick look at what the PSD2 Directive entails and when it will come into full force.
What is PSD2?
Ways to improve customer rights under the Directive
Reducing Fraud and Enhancing Security
IMPORTANT
Personal contactless payments: this includes one-time transactions up to € 50 with a maximum aggregate value of € 150 or 5 transactions. Online payments: one-time transactions must be less than € 30, up to a maximum of € 100 or 5 transactions. Transaction Risk Analysis: A transaction can be exempted from the SCA procedure if it is “low risk”. This exclusion is subject to certain requirements and conditions that are met. Enterprise Payments: These are “secure virtual payments”. The transaction must be initiated by a legal entity and not by a consumer. Whitelisting: Consumers can whitelist sellers so that all future transactions with that seller do not require additional security checks.Recurring Payments: This refers to recurring payments made to the same merchant for the same amount. Open Banking: One of the aspects of PSD2 that has received the most attention is third party data access and Open Banking.
This has created a requirement for the 9 largest UK banks to release APIs that will allow third-party providers - known as AISP (Account Information Service Providers) and PISP (Payment Initiation Service Providers) - to access bank accounts and create entirely new services. The goal here is to give consumers more transparency and control over their finances.
Output
On January 13, 2018, most of PSD2's requirements came into effect, including those related to improving consumer rights. However, SCA requirements and the third party access structure will only take effect in September 2019. The European Commission published the final regulatory technical standards relating to these two elements in November 2017, and the European Parliament must approve or reject these provisions by February.
If the RTS is approved, it will take another 18 months for the new laws to come into effect, which means the SCA and third party access rules are likely to take effect in September 2019.
We are actively following the latest news. IQ Decision UK lawyers are ready to provide their support if you want to become a payment service provider in the EU.
iqdecision.com
The new EU Payment Services Directive (PSD2) entered into force on 13 January 2018[/B], introducing new laws aimed at improving consumer rights. If you want to provide payment services in the EU, this overview will be useful for you. However, some of the rules will not take effect until September 2019 at the earliest. Let's take a quick look at what the PSD2 Directive entails and when it will come into full force.
What is PSD2?
- Expansion of consumer rights in areas such as handling complaints, new rules for the collection of fees and currency conversion.
- Increased security with Strong Customer Authentication (SCA) criteria.
- The ability for third parties to access account information, providing the basis for new payments and account services.
Ways to improve customer rights under the Directive
- Transparency. Regulation also requires more transparency about currency and currency conversion when making a payment. Products such as Dynamic Currency Conversion (DCC) are also covered by this requirement.
- Consideration of complaints as soon as possible. PSD2 requires payment providers to resolve complaints in a timely and appropriate manner. For example, it says payment providers must respond to a complaint within 15 days.
- Reporting. As part of the new complaints rules, PSD2 sets out how incidents should be reported, whether they are customer complaints, fraud, system downtime, or whatever. Currently, there is a clear time frame that defines how and when suppliers should report incidents to the appropriate authorities.
- Allocation of funds. PSD2 is pushing for funds to be disbursed to customers as soon as the final amount is known. When the final amount is confirmed, the merchant is obliged to inform his buyer, who must give instructions to withdraw these funds from the account or not.
Reducing Fraud and Enhancing Security
- something that only the client knows, such as a PIN or password.
- something that only the customer has, such as a mobile phone or payment card.
- something unique to the customer, such as a fingerprint.
IMPORTANT
Personal contactless payments: this includes one-time transactions up to € 50 with a maximum aggregate value of € 150 or 5 transactions. Online payments: one-time transactions must be less than € 30, up to a maximum of € 100 or 5 transactions. Transaction Risk Analysis: A transaction can be exempted from the SCA procedure if it is “low risk”. This exclusion is subject to certain requirements and conditions that are met. Enterprise Payments: These are “secure virtual payments”. The transaction must be initiated by a legal entity and not by a consumer. Whitelisting: Consumers can whitelist sellers so that all future transactions with that seller do not require additional security checks.Recurring Payments: This refers to recurring payments made to the same merchant for the same amount. Open Banking: One of the aspects of PSD2 that has received the most attention is third party data access and Open Banking.
This has created a requirement for the 9 largest UK banks to release APIs that will allow third-party providers - known as AISP (Account Information Service Providers) and PISP (Payment Initiation Service Providers) - to access bank accounts and create entirely new services. The goal here is to give consumers more transparency and control over their finances.
Output
On January 13, 2018, most of PSD2's requirements came into effect, including those related to improving consumer rights. However, SCA requirements and the third party access structure will only take effect in September 2019. The European Commission published the final regulatory technical standards relating to these two elements in November 2017, and the European Parliament must approve or reject these provisions by February.
If the RTS is approved, it will take another 18 months for the new laws to come into effect, which means the SCA and third party access rules are likely to take effect in September 2019.
We are actively following the latest news. IQ Decision UK lawyers are ready to provide their support if you want to become a payment service provider in the EU.
iqdecision.com
