Payment Services Regulation in the European Union

Overview

The European Union (EU) has implemented Directive 2015/2366 (PSD II), which aims to ensure the security of electronic payments and reduce fraud risk. This regulation has significant implications for payment services providers, consumers, and traders.

Key Objectives

• Ensure the Security of Electronic Payments: PSD II sets out strict security requirements to protect consumer financial data and reduce the risk of unauthorized transactions.
• Reduce the Risk of Fraud: The regulation aims to minimize the risk of fraud, particularly in online transactions, by improving existing EU rules on electronic payments.

Regulatory Framework

Key Legislation

• Directive 2015/2366 (PSD II): Entered into force on January 13, 2018.
• EU Regulation 2018/389: Complements PSD II and provides additional guidelines for payment services providers.
• EU Regulation 2015/751: Establishes rules for electronic payments and protection of consumer financial data.

Key Features

• Strict security requirements to protect consumer financial data
• Protection of consumer rights, including liability for unauthorized payments and right to unconditional repayment
• Removal of fees for using debit or credit cards
• Development of a publicly accessible central register of authorized payment institutions by the European Bank Authority

Impact

Benefits for Traders

• Reduced costs for traders in accepting debit or credit cards
• Improved efficiency in processing electronic payments

Benefits for Consumers

• Improved security of electronic payments
• Protection of consumer rights, including liability for unauthorized payments and right to unconditional repayment
• Removal of fees for using debit or credit cards
• Access to a publicly accessible central register of authorized payment institutions

Economic Impact

• Formalization of the economy through increased use of electronic payments
• Promotion of competition and innovation in the payment services market