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October 31, 2018

Payment Services Directive 2

Running a fine-tooth comb on the new rules

Payment Services Directive


The Payment Services Directive1 (PSD) came into force in 2007 to help develop the Single Euro Payments Area (SEPA) by regulating payment services payment service providers throughout the European Union (EU) and the European Economic Area (EEA).


PSD was aimed at increasing competition and encouraging non-banks to participate in the payments industry, besides enhancing the security and transparency of payment transactions for consumers across the areas.


PSD1 was adopted into national legislation by all EU and EEA member states by 2009, and was updated in 2009 and 2012. In 2013, PSD was reviewed by the European Commission and in October 2015, PSD2 was adopted to create a safer and more innovative European payments system.


PSD timeline


2007-2009: PSD came into effect in 2007 and was fully implemented in 2009.


2013-2014: In 2013, the European Commission reviewed the first PSD to modernize and take new types of payment services, such as Payment Initiation Services or PIS, into account. PSD2 aims to improve innovation, reinforce consumer protection, improve the security of internet payments and account access within the EU.


2015-2016: PSD2 was adopted by the European Parliament in October 2015. It was published in the official journal of the EU on December 23, 2015 and came into force 20 days later, on January 12, 2016.


2017-2019: PSD2 had become applicable as of January 13, 2018, except for the security measures outlined in the Regulatory Technical Standards (RTS)2. Subject to the agreement of the Council and the European Parliament, RTS is due to become applicable around September 2019.


PSD2 will revolutionize the way customers make digital payments by allowing them to use third-party providers to make payments.


As per the European Central Bank, the number of non-cash transactions has increased at a CAGR of 5.6% from 86.4 billion in 2010. These transactions include:

  • Card payments
  • Credit transfers
  • Direct debit
  • Cheques


1 https://en.wikipedia.org/wiki/Payment_Services_Directive#cite_note-1

2 http://ec.europa.eu/finance/docs/level-2-measures/psd2-rts-2017-7782_en.pdf