29.04.2025
The payments world is preparing for another big shift: PSD3.
As the European Commission moves forward with the next major update to the Payment Services Directive (PSD), payment providers across Europe — and anyone dealing with cross-border payments — need to get ready.
First, a Quick Look Back: Why PSD3 Is Needed
PSD2, implemented between 2018–2019, was groundbreaking at the time. It strengthened consumer rights, encouraged competition, and introduced rules that made digital payments more secure.
However, the digital payments landscape has evolved faster than the regulation. New players have entered the market, fraud has become more sophisticated, and technology like embedded finance, digital wallets, and real-time payments has gone mainstream. PSD3 is designed to catch up to these changes and future-proof the European payment ecosystem.
Key Changes Under PSD3
While the full scope of PSD3 is still being finalized, early drafts and discussions highlight several major shifts that payment providers should expect:
1. Tighter Rules for Open Banking
PSD3 will likely push open banking to a new phase, requiring better APIs, broader data sharing, and stronger consumer protections. Payment Initiation Service Providers (PISPs) and Account Information Service Providers (AISPs) could face stricter licensing and operational requirements.
2. Enhanced Consumer Protections
Refund rights, dispute mechanisms, and transparency obligations are expected to become stricter. Merchants and PSPs will need to provide even clearer information about fees, transaction risks, and user consent.
3. Stronger Fraud Prevention
New standards around real-time transaction monitoring and reporting obligations are expected. Fraud reporting will become faster, and PSPs may be required to collaborate more closely with authorities when suspicious activity is detected.
4. Revised Licensing and Supervision
PSD3 may broaden the scope of who needs to be licensed, potentially pulling in players that were previously unregulated under PSD2 (such as certain wallet providers and BNPL companies). It could also give regulators more oversight into PSP operations.
5. Tighter Control of Digital Wallets and Embedded Finance
PSD3 is likely to introduce clearer rules around wallet providers, white-label banking solutions, and embedded finance players, who have traditionally operated in a regulatory grey area.
Why Payment Providers Should Care
If you’re a PSP, an acquirer, or a fintech involved in any part of the payment flow, PSD3 will impact you.
Here’s why:
- Increased compliance costs: Upgrading security, updating APIs, adjusting disclosures, and obtaining new licenses can be resource-intensive.
- Opportunity for differentiation: Providers that adapt early and offer seamless, compliant services will stand out in a crowded market.
- Faster innovation cycles: With clearer regulation, there’s less uncertainty about how to build new products that involve payments, data, and financial services.
In short, PSD3 isn’t just about tightening regulations—it’s about shaping the future competitive landscape of European (and potentially global) payments.
What Payment Providers Should Do Now
Even though PSD3 won’t fully take effect immediately, forward-looking PSPs are already preparing. Here’s how you can stay ahead:
- Audit your APIs and data-sharing practices: Make sure your open banking integrations meet high technical standards and transparency expectations.
- Strengthen fraud detection and reporting processes: Real-time monitoring, machine learning tools, and faster escalation protocols could soon become mandatory.
- Review consumer communication strategies: Ensure that terms, fees, and rights are presented clearly and accessibly across all customer touchpoints.
- Evaluate licensing and regulatory relationships: If you operate in areas like digital wallets, embedded finance, or BNPL, check whether PSD3 might require a license adjustment or additional oversight.
- Build flexibility into your compliance roadmap: Regulations will continue to evolve — systems and teams must be adaptable, not just reactive.
Final Thoughts
PSD3 represents both a challenge and an opportunity for payment providers. Those who see it as a chance to improve user trust, upgrade infrastructure, and refine compliance strategies will have an edge.
The shift toward stronger consumer protections, smarter fraud prevention, and clearer open banking standards isn't just about checking boxes—it's about building a more secure, innovative, and competitive payments ecosystem.
Smart providers aren’t just waiting to see what happens. They're getting ready now.