PSR and PSD3 – An Overview of the Implications

Required knowledge

• Basic understanding of payment ­transactions
• Knowledge of the PSD2 Directive and its objectives

In 2015, the EU Commission adopted and introduced the second Payment Services Directive EU 2015/2366 (PSD2). The aim was to regulate technical innovations in the retail payments market, the increasing number of electronic and mobile payments, and new payment services. 

Revision

As part of the 2020 work program, the Commission has presented a package of measures as the third priority under the title “An economy that works for people”.

This includes the revision of the existing PSD2 regulation. In its analysis, the Commission identified four fundamental problems in the market:

• Customers are vulnerable to fraud and lack trust in payments.
• The open banking sector functions incompletely.
• The supervisory authorities of the EU member states have different powers and duties.
•  There are unequal competitive conditions between banks and payment service providers outside the banking sector.

The following actions, among others, can help address the issues identified:   

• Improving the use of strong customer authentication
• Creating a legal basis for fraud information sharing
• Mandatory fraud reporting to customers
• Conditional waiver of liability for fraud on authorized push payments
• Requiring payment service providers to improve strong customer authentication for people with disabilities
• Requiring account-holding payment service providers to provide a dedicated data access interface
• Introducing a “permissions dashboard” to allow users to manage the open banking access permissions granted to them
• Transposing most of PSD2 into a directly applicable regulation to clarify unclear aspects of PSD
• Integrating licensing regimes for payment and e-money institutions
• Strengthening the rights of payment and e-money institutions to a bank account
• Allowing payment and e-money institutions to participate directly in all payment systems, including those set up by member states under the Settlement Finality Directive (SFD).

This resulted in two proposals to revise the PSD2 Directive, which the Commission published on 28 June 2023: the Payment Services Directive (PSD3) and the Payment Services Regulation (PSR). In a directive, the European Council specifies certain results to be achieved. It is up to the member states to decide how to transpose the directive into national law with regard to the results. A regulation, on the other hand, is directly applicable in the EU member states. This ensures harmonized implementation throughout the EU.

EEA states, such as Liechtenstein, must incorporate directives and regulations into the EEA Agreement. This is done via the EEA adoption procedure. The EEA Joint Committee, which consists of representatives of the EU and the EEA/EFTA states of Norway, Iceland, and Liechtenstein, examines the legal acts to be incorporated. Formal adoption takes place through the inclusion of the acts in the list of protocols and annexes to the EEA Agreement. After incorporation into the Agreement, the EEA/EFTA state concerned must implement the act into national law in accordance with national provisions. This is a formal process that only allows for technical adjustments. In Liechtenstein, this is the responsibility of the EEA Unit. In cooperation with experts from the Liechtenstein national administration and the ministries, the EEA Unit prepares biennial EEA Working Lists, which the government adopts in a government decree, together with the implementing measures and implementation schedules specified therein.