A new EU directive that came into force last week makes it cheaper, easier and safer to make electronic payments in shops and online, allowing consumers to access more convenient, cost-effective and innovative solutions offered by payment providers.
The European Commission last week published and implemented its revised Payment Services Directive (PSD2), which started applying from 13 January and aims to modernise Europe’s payment services to benefit consumers and businesses.
The new regulations better protect consumers and ban surcharges for consumer debit and credit card payments, which could save more than EUR550m (US$) annually, according to a press release from the Commission.
The rules have stringent, built-in security provisions to significantly reduce payment fraud levels and to protect the confidentiality of users’ financial data. They require a combination of at least two independent elements, which could be a physical item – a card or mobile phone – combined with a password or a biometric feature, such as fingerprints, before making a payment.
PSD2 also establishes a framework for new services linked to consumer payment accounts, such as the so-called payment initiation services and account information services. These services are already on offer in many EU countries, but the activation of PSD2 means they will be available to consumers across the EU, subject to strict security requirements. The rules specify the requirements for common and secure standards of communication between banks and FinTech companies, ie third-party providers.
“These new rules will guide all market players, old and new, to offer better payment services to consumers while ensuring their security,” says Valdis Dombrovskis, vice-president in charge of Financial Stability, Financial Services and Capital Markets Union.
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By GlobalDataUnder the new rules, the simple provision of a password or details shown on a credit card will, in most situations, no longer be sufficient to make a payment. In certain cases, a code that is only valid for a given transaction will be needed together with the other two independent elements.
