PSD2 – Payment Services Directive 2

What is the Payment Services Directive 2?

PSD2 stands for Payment Services Directive 2. It’s an EU directive designed to produce safer and more innovative payment services. PSD2 has three main benefits: increased customer rights, enhanced security through Secure Customer Authentication (SCA), and the enablement of third-party access to your account information.

• Customer rights – PSD2 regulation improves customer rights in several different ways. Firstly, it mandates greater transparency around terms and conditions and currency conversion. Secondly, it requires payment providers to resolve complaints in a timely manner and stipulates exactly how incidents should be reported. Thirdly, it requires card issuers to make funds available to customers as soon as they know the final amount. Finally, it prohibits surcharges on certain transactions.
• Security – PSD2 banking will also have a significant effect on the way that merchants accept payments, with the aim of cracking down on fraudulent payments. Essentially, it introduces a two-factor ID requirement for some transactions, meaning that customers will need to provide two forms of identification.
• Third-party access – Another key benefit of PSD2 is the fact that it reduces the banking industry’s monopoly on its user data. It allows merchants like Amazon to retrieve your data from your bank (with your permission) which means that whenever you buy something, the merchant can essentially make the payment for you.