EU regulation of payment services—essentials

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • EU regulation of payment services—essentials
  • Scope of this Practice Note
  • Background to PSD2
  • The scope of PSD2 and its application to third-party payment services providers
  • Geographic scope and non-EU currencies under PSD2
  • What is a ‘payment service’?
  • PSD2 exclusions—what is not a payment service
  • Limited network under PSD2
  • Commercial agents under PSD2
  • Mobile device content under PSD2
  • More...

EU regulation of payment services—essentials

Scope of this Practice Note

This Practice Note provides an overview, and highlights the key provisions, of the second Payment Services Directive (PSD2), which came into effect on 13 January 2018. It provides a comparison against the first Payment Services Directive (PSD). It also describes the subordinate level 2 measures required to be adopted by the European Commission under PSD2 and provides an overview of the level 3 measures published by the European Securities and Markets Association (ESMA), the European Banking Authority (EBA) and the European Commission in relation to PSD2.

For more information about equivalent provisions in the Payment Services Regulations 2017, SI 2017/752 (PSRs 2017), see Practice Note: UK regulation of payment services providers—essentials

Background to PSD2

The first Payment Services Directive (Directive 2007/64/EC) (PSD) was required to be implemented by 1 November 2009 by Member States. The PSD was intended to regulate payment services providers (PSPs) and harmonise the payments sector within the EU.

Advances in payments systems outstripped the regulatory capacity of the PSD and, in July 2013, the European Commission (Commission) introduced a Proposal for a second Payment Services Directive (COM(2013) 547 final) (PSD2) which incorporates and repeals the PSD. PSD2 addresses the technological advances affecting payments, the increased incidence of online payments fraud and inconsistent implementation of certain provisions of the PSD. It introduces rules for third-party

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