The European Commission publishes the draft of the new PSD3

The European Commission publishes the draft of the new PSD3

The European Commission publishes the draft of the new PSD3, the third Payment Services Directive, taking an important step in the regulation of financial services. This new legislative proposal seeks to update and strengthen the existing regulation, adapting it to technological advances and new market challenges.

In other words, among its objectives is to modernize the regulatory framework of the European Union in order to improve the functioning of the payment markets in the region.

Objective of the draft of the new PSD3

PSD3’s main objective is to improve the security, efficiency and innovation of payment services in the European Union. To achieve this, it seeks to address existing loopholes in current regulation and ensure greater protection for consumers.

At the same time, it aims to foster competition and financial inclusion, promoting a stronger and more dynamic single market for payment services.

The regulatory framework consists of six fundamental pillars:

• Facilitate data sharing: The proposal allows users to share their data with other financial and fintech entities, giving them the option to do so, but without imposing an obligation on them.
• Obligation to provide data: It is established that the entities responsible for user data, such as banks, must provide that data to third parties, such as other financial institutions or financial technology companies.
• Control of users over their data: Users are guaranteed full control over who can access their data and for what purpose, giving them greater privacy and security.
• Data standards and interfaces: The aim is to standardize user data and the necessary technical interfaces, which will facilitate interoperability between the different systems and promote greater efficiency in payment services.
• Responsibility in case of data breach: A clear liability regime is established in the event of data breaches, which provides protection for users and defines dispute resolution mechanisms.
• Incentives for high-quality interfaces: Additional incentives are offered to data controllers to implement high-quality interfaces, improving the experience of users when interacting with their data.

What does the draft of the new PSD3 say

The draft of the new PSD3 proposes a number of significant changes and additions to the existing regulation. Some of the highlights include:

• Greater protection for consumers: The draft introduces measures to strengthen the security of transactions and prevent fraud.

This includes the implementation of Strong Customer Authentication (SCA) in all electronic transactions, as well as improved claim and refund mechanisms for users.

• Opening of the bank: PSD3 proposes boosting competition in the banking sector by requiring banks to allow third-party access to their customers’ data, provided the latter authorize it.

This would encourage the emergence of new fintech companies and promote innovation in financial services.

• Online and mobile payments: The PSD3 draft seeks to promote online and mobile payments, facilitating their use and offering greater protection to users.

It also seeks to establish a clear regulatory framework for new business models in the field of digital payments, such as electronic wallets and payments through mobile applications.

Impact that it could have

The implementation of PSD3 would have a significant impact on the landscape of payment services in Europe. On the one hand, it is expected to improve consumer protection and confidence, which could encourage greater use of electronic payment services and the adoption of new technologies.

On the other hand, the opening of banking and the promotion of competition could boost innovation and the entry of new players into the market. This could benefit consumers by offering them a greater variety of choices and more personalized services.

However, the implementation of the PSD3 also poses challenges for traditional banks and financial institutions, as they will have to adapt to the new requirements and compete with fintech companies and non-traditional payment service providers.

While the PSD3 draft is still subject to change and debate, it is clear that its implementation could have a significant impact on the landscape of payment services in Europe.

Sector players should be attentive to updates and prepare to adapt to the new regulations and opportunities that PSD3 may bring with it.

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