PSD2s

PSD2s refers to the second Payment Services Directive in the European Union, a regulatory framework that governs payment services and providers. Enacted as Directive 2015/2366, PSD2 aims to modernize the payments landscape, improve security, and foster competition and innovation by enabling regulated third-party access to customer accounts with explicit consent.

Key provisions of PSD2 include the introduction of Strong Customer Authentication (SCA) for many electronic payments and online access, intended to reduce fraud and increase reliability. It also creates an access-to-account regime (XS2A) that obliges banks to provide protected access to payment accounts and related data to authorized third-party providers, under strict supervision. This has formed the basis for new market entrants such as Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs), which can operate with customer consent and standardized interfaces.

The directive also extends licensing and supervision requirements to a broader set of payment service providers, with emphasis on transparency about terms and fees and enhanced consumer protections. To support implementation, regulatory technical standards (RTS) on SCA and secure communication were developed, shaping how banks and third parties exchange information and verify identities. Open banking initiatives have emerged as a practical manifestation of PSD2, with banks exposing APIs and fintechs building services atop them.

Impact and significance: PSD2s seeks to level the playing field between traditional banks and fintechs, promote safer and more convenient digital payments, and expand consumer choice. It entails important security and compliance considerations for incumbents and new entrants alike, while also driving innovation in areas such as payment initiation, account aggregation, and data-enabled financial services.