Jan 30, 2018Industry insights,
What is PSD2?
The Second Payments Directive (PSD2) is a fundamental piece of payment related legislation designed by the countries within the European Union. Similar to the General Data Protection Regulation (GDPR) which also comes into law this year, the PSD2 aims to revolutionise the payments industry and will have an impact on the way we conduct our transactions online, and what information we will see when we make an online payment.
PSD2 is being labelled as an evolution of existing regulations within the payment industry and is considered a vital step towards a Digital Single Market within Europe.
The core changes centre on increasing competition within the payments industry, by promoting competition through a regulatory framework which introduces new types of payment methods, the development of financial innovation and emerging FinTech brands. In addition, a core aim will be to enhance customer protection and security against fraud, abuses and payment incidents. This will be achieved through stringent security measures such as strengthening customer authentication for online payments.
It’s likely that PSD2 will simplify the processes involved with online and electronic transactions. With your permission, it will allow certain ‘merchant’ businesses to access your payment details, which means in effect, they will be able to make the payment for you, on your behalf without the need for third party companies such as PayPal.
PSD2 has been transposed into national law in the UK since the 13th January 2018, and is expected to lead a major change in terms of the way customer data is accessed by third parties with the use of explicit consent, and how customers will be able to utilise payment initiation services alongside account information to make internet and mobile payments easier.
To find out more about PSD2 and how this could impact your own business, take a look at the ‘Financial Conduct Authority’s, Find out how PSD2 affects your business’ page.