The European Payment Services Directive (PSD2)
On 12 January 2016, the revised Payment Services Directive (“PSD2”) came into force in Europe. This replaces the Payment Services Directive (“PSD”) that was adopted in 2007 to provide a legal foundation for an EU single market for payments, to deliver safer and more innovative payment services across the EU.
The European Commission proposed to review the PSD to bring it up to speed with new types of payment services, such as payment initiation services. These service providers are providing new and innovative alternatives to internet payments but have been previously unregulated. At the same time, certain rules set out in the PSD, have been applied by Member States in different ways, leading to regulatory arbitrage and legal uncertainty. It has also led to weakened protection for the consumer and competitive distortions.
The revised Payment Services Directive (“PSD2”) is set to establish a level playing field between different providers and enhance consumer protection. Its main objectives are to:
- Contribute to a more integrated and efficient European payments market
- Improve the level playing field for payment service providers
- Make payments safer and more secure
- Protect consumers
- Encourage lower prices for payments
The role of mobile operators
PSD2 mandates the use of robust authentication standards and mobile network operators could play a leading role in helping to verify and authenticate payments. Assets such as network authentication, roaming and location are all particular to mobile networks, making operators a valuable partner in the development of new identity and authentication solutions.
PSD2 is happening alongside Electronic Identification and Trust Services (eIDAS) regulation as part of the European Union’s push towards the Digital Single Market. Operators have already launched pilots for eIDAS compliant cross-border authentication solutions for the use of public sector services. PSD2 and eIDAS regulation give an indication of the importance of operators and the unique way in which they can help determine identity for both the private and public sectors.
The deadline for EU member states to implement PSD2 into their national laws and regulations is 13 January 2018.