DSP2

DSP2, also known as Directive 2015/2366, is a European Union directive that governs payment services within the EU and the European Economic Area. It came into effect in January 2018, replacing the original Payment Services Directive (PSD1). The primary aim of DSP2 is to foster innovation, increase competition, and enhance consumer protection in the digital payments landscape.

A key innovation introduced by DSP2 is the concept of Open Banking. This requires banks to provide access to customer account data to authorized third-party providers (TPPs) through secure application programming interfaces (APIs). This enables TPPs to develop new payment services and applications, such as account information services (AIS) and payment initiation services (PIS). Consumers can benefit from a wider range of innovative financial products and services, often with improved user experiences.

DSP2 also strengthens consumer protection by introducing stricter security requirements for electronic payments, known as Strong Customer Authentication (SCA). SCA mandates that payment service users verify their identity using at least two independent elements when initiating an electronic transaction or accessing their account. This aims to reduce fraud and protect consumers from unauthorized access to their financial information. The directive also clarifies liability for unauthorized transactions and improves dispute resolution mechanisms.

In essence, DSP2 has reshaped the European payments market by promoting competition through Open Banking and enhancing security and consumer trust through SCA. It has paved the way for a more dynamic and innovative financial services ecosystem.