Banks and other payment service providers, their customers and financial technology companies will be affected by ‘Directive (EU) 2015/2366 ’ introduced to update, harmonise and clarify the payment services regime across the European Economic Area – which comprises the 28 EU member states plus Norway, Iceland and Liechtenstein.

Also known as the Second Payment Services Directive (PSD2) it takes account of developments that have dramatically changed the payment services market since the First Payment Services Directive was brought into force in 2007, introducing new measures to ensure all payment service providers are appropriately supervised and regulated.

The major innovation is a regulatory framework for two new types of ‘3rd party’ payment service providers. Rather than providing or servicing payment accounts, the so-called Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) merely facilitate and improve the way customers manage their existing online payment accounts and make better comparisons of deals.

This reflects the rapid growth in e-commerce activities and the use of internet and mobile payments, the flow of new technologies and the trend for customers to have relationships with multiple payment services providers.

 In summary, the key changes introduced by PSD2 are intended to

• further standardise card, internet and mobile payments and make them interoperable

• reduce barriers to entry, in particular for card and internet payments

• align charging and steering practices across the EEA

• reduce the freedom of member states to vary the transposition of certain aspects of the directive, thus helping to ensure consistency from one state to another

• bring emerging payment service types within the scope of the regulation

An HM Treasury consultation, ‘Implementation of the revised EU Payment Services Directive (PSDII)’, explains how the directive will be implemented in the UK through new Payment Services Regulations before the 13 January 2018 deadline, in the light of the UK’s withdrawal from the EU.

10/2/2017