The Payment Services Directive (PSD2) is an EU Payment Directive aimed at providing increased flexibility and security to clients in the execution of payments within the EU. A common payments standard will be implemented to facilitate the directive.
An update on PSD1
PSD2 widens the scope of PSD1 by covering new services and players as well as by extending the scope of existing services (payment instruments issued by payment service providers that do not manage the account of the payment service user), enabling their access to payment accounts.
PSD2 also updates the telecom exemption by limiting it mainly to micro-payments for digital services and includes transactions with other countries when only one of the payment service providers is located within the EU ("one-leg transactions"). It also enhances cooperation and information exchange between authorities in the context of authorisation and supervision of payment institutions. The European Banking Authority (EBA) will develop a central register of authorised and registered payment institutions.
To make electronic payments safer and more secure, PSD2 introduces enhanced security measures to be implemented by all payment service providers, including banks. PSD2 requires payment service providers to apply strong customer authentication (SCA) for electronic payment transactions generally. To that end, the Commission adopted rules that spell out how strong customer authentication (SCA) is to be applied.
PSD2 and KBC
In relation to PSD2, all European banks face the same strategic question, whether to simply comply with the Directive, or exploit the opportunity it presents? KBC is firmly in the latter category i.e. We aim to maximise the opportunity that it offers to challenger banks, as we compete in an increasingly open marketplace – our ambition is to become Europe’s leading Multibank.