What is PSD2?
PSD2 establishes legislative changes to the way payments are managed in the EU. It is the successor of the Payment Services Directive (PSD) designed back in 2007 to regulate and create a single payment market in the European Union.
The aim was to increase competition, liberalise the payments industry, increase consumer safety, stimulate innovation and set the rights and obligations of payment providers and users. PSD2, in fact, appears as a revised version of PSD back in 2013, scheduled to come into effect in 2018/19.
Why was PSD2 created?
PSD2 was created due to the changes in consumer behavior and the evolution in the ways we pay, following technology innovation and consumer demand. It is meant to make the payment industry safer and fairer.
When does PSD2 come into effect?
PSD2 incorporates various measures. It came into effect in 2018, with some important changes that came into effect in September 2019.
What changes does PSD2 bring?
The European Commission has long sought to make electronic payments as simple and secure across the EU as they are within a single market.
- Strong Customer Authentication (SCA) for electronic payment transactions.
- Third-party access to data, with the consent of consumers.
- Enhanced protection and rights for consumers.
- Increase of competition in the market.
- Adding new payment services into regulation.
The changes mean that new rules promote transparency in mobile and online payments, allowing customers to use third-party providers to manage their finances.
With the customers’ consent, third-party payment providers can access banking data through APIs, or application program interfaces. PSD2 is also trying to implement modern security methods across all fields. It is now a legal requirement to provide stronger identity checks during online purchases, making customer transactions safer through multi-factor authentication.
How will PSD2 affect marketplaces?
There are several options for merchant’s marketplaces to comply with PSD2 changes. Either become a payment institution, which incurs significant cost and operational changes, or outsource part of the marketplace functionality, such as payments to a licensed payment institution such as myPOS.
PSD2 and myPOS
Always being driven by innovation and modern technologies, we at myPOS have taken all the necessary measures to ensure that the payment service of our merchants is in line with PSD2. By choosing myPOS as your partner in payments, you save yourself hassles and ensure a frictionless payment experience for your customers upon checkout, compliant with the latest regulatory changes.