PSD3 and PSR introduce many new measures. These all aim to address the changing world of electronic payments and reduce financial risks, including fraud and data breaches.
Some of the key changes proposed under PSD3 and PSR include:
1. Strengthened Strong Customer Authentication
PSD3 aims to make electronic payments more secure by strengthening Strong Customer Authentication (SCA) protocols. It will do this by introducing new rules on data sharing and account verification.
One big shift is that businesses will need to share more data with issuers – or the bank acting on behalf of a consumer in an online transaction. By using this data, which includes spending habits, user location, and device information, issuers should be able to increase transaction approval rates.
Another proposed change is in the liability for transactions. Card schemes (such as Visa or Mastercard), payment gateways, and technical service providers (such as the companies that operate digital wallets) will be liable for fraud if they fail to apply SCA.
2. Enhanced accessibility for all users
PSD3 is not just about tightening security, it's also about opening doors. The directive seeks to provide better access to payment systems by focusing on the needs of all users, including the elderly and those with disabilities. It recognises that the digital payment landscape must be inclusive, ensuring that everyone can participate with ease and confidence.
To achieve this, PSD3 introduces guidelines that encourage the development of user-friendly interfaces and authentication methods that cater to a diverse range of users. This might include voice recognition for users with visual impairments or simplified authentication processes for the elderly who may find complex digital tasks challenging.
3. Streamlined open banking
PSD3 will improve open banking services, simplifying and enhancing the framework that allows TPPs to offer innovative financial services by accessing customer data held by banks. It introduces targeted amendments to improve the functioning of open banking, making it more efficient, secure, and customer-friendly.
One key change is a mandate which forces banks and other financial institutions to share more data. This will help create a fairer and more competitive environment for innovation.
PSD3 requires banks to set up a dashboard that gives customers control over their data-access permissions, empowering them to easily manage and revoke access as needed. This will improve transparency and strengthen customer trust in the open banking ecosystem.
By streamlining open banking, PSD3 and PSR should foster innovation and ensure that the benefits of open finance are accessible to all, creating a more open, integrated, and customer-centric financial market.
4. An established framework for financial data access
Building on the success of open banking, PSD3 proposes a framework that extends the principles of open finance to a wider range of financial data. This initiative, known as the Financial Data Access (FIDA) proposal, aims to give consumers and businesses greater control over their financial data, enabling them to share it with third-party providers for innovative services.
The proposal covers various types of customer data, including personal and non-personal data related to loans, savings, investments, pensions, and non-health related insurance. It seeks to standardise customer data and access interfaces, allocate costs between data holders and users, and establish clear liability regimes to facilitate secure and efficient data sharing.
By establishing a framework for financial data access, PSD3 could unlock the potential of open finance to drive innovation, improve financial services, and empower consumers and businesses.
5. Simplified and enforced regulations
In an effort to streamline the regulatory landscape and ensure compliance, PSD3
proposes merging the legal regimes for payment and electronic money institutions into a single legislation. This is being done to harmonise and simplify the different laws and regulations in place across the EU.
PSD3 includes detailed enforcement provisions, including specific sanctions for breaches. It also grants new intervention powers to the European Banking Authority. These measures are designed to reinforce consumer protection and ensure that the financial services market operates in a fair, transparent, and secure manner.
By simplifying and enforcing regulations, PSD3 should ensure that consumers are protected by the highest, most robust standards.
