Psd2 Banking

The second payment services directive psd2 on the other hand requires banks to open their payments infrastructure and customer data assets to third parties that can then develop payments and information services to your customers.

Psd2 banking. Open banking aka psd2 forces the biggest uk banks to open up their precious data which could mean big changes for the way we use money. The eu revised payment services directive or psd2 came into effect january 2018. While this expansive regulation includes numerous updates the requirement for financial institutions to participate in an open banking system is arguably the most disruptive. Psd2 was the key to democratising finance and creating more competition.

The revised payment services directive psd2 directive eu 2015 2366 which replaced the payment services directive psd directive 2007 64 ec is an eu directive administered by the european commission directorate general internal market to regulate payment services and payment service providers throughout the european union eu and european economic area eea. What is psd2 psd2 regulations ensure that banks will create mechanisms to enable third party providers to work securely reliably and rapidly with the bank s services and data on behalf and with the consent of their customers. It will allow merchants businesses like amazon to retrieve your account data from your bank with your permission. That means when you buy something they can make a payment for you without having to redirect you to another service like paypal or visa.

Psd2 will break down the bank s monopoly on their user s data. It introduces security requirements for the initiation and processing of electronic payments as well as for the protection of consumers financial data. The regulation s very creation came from the feeling that banks had far too great a monopoly on european consumers financial data. Almost all new regulations since 2008 have focused on tightening the banking business and operating model.

The revised payment services directive 2 psd2 aims to better align payment regulation with the current state of the market and technology.