European Union: Payments regime reform - revolutionary evolution?

In brief

On 28 June 2023, the EU Commission published its long-awaited package of reforms to the EU payments regulatory regime. Deeming the package an “evolution not a revolution” of the EU payments framework, the Commission has published proposals for:

  • A third Payment Services Directive (PSD3) repealing and replacing the Payment Services Directive (PSD2) and Electronic Money Directive (EMD2)
  • A new Payment Services Regulation (PSR), which will harmonize and directly apply most of the conduct obligations imposed on payments firms
  • A new Regulation on a framework for financial data access, relating to open finance
  • A new Regulation on the establishment of a digital euro (with Annexes).


These proposals seek to achieve four specific objectives:

  1. Strengthen user protection and confidence in payments – to be achieved through improvements to the application of strong customer authentication (SCA), strengthened measures to combat payment fraud, measures to improve the availability of cash, and improvements to user rights and information.
  2. Improve the competitiveness of open banking services – to be achieved through improving the performance of data interfaces and new open banking permissions dashboards.
  3. Improve enforcement and implementation in Member States – to be achieved through directly applicable conduct obligations in the new PSR, reinforcing national competent authority enforcement powers, and merging the payments and e-money regimes.
  4. Improve (direct or indirect) access to payment systems and bank accounts for nonbank payment service providers (PSPs) – to be achieved through allowing PSPs direct access to all EU payment systems, and granting them a right to have a bank account.

On the whole, the proposals represent a step change in regulatory oversight of payments across the EU. While the changes proposed by the Commission are all evolutionary in movement, the structural reorganisation of the framework, with a merger of the payments and e-money regimes and direct application of conduct obligations, will lead to significantly enhanced oversight for the industry. With an implementation period of 18 months proposed, payments and e-money firms affected by the potential changes should begin to consider what they mean for their businesses.

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