Payment Services Directive 2: Safer Electronic Payments

The Payment Services Directive 2, known as the PSD2, has replaced the first Payment Services Directive which has been in place since 2007. The revised version of the directive came into force on January 13 of this year as a result of a much-needed update to keep up with advancements in digital technology.

PSD2 seeks to strengthen security measures whilst further protecting the financial data of consumers when making and receiving online payments.  The second directive has been created to improve consumer protection through the application of strong customer authentication. Thus, reducing the risk of fraud for electronic transactions.

Summary of key changes:

  • PSD2 extends to cover all currencies; not just the euro. This, as long as one payment service provider is located within the EU and/or EEA.
  • The payer’s liability of unauthorised transactions is reduced from €150 to €50 except in cases of intentional fraud or negligence by the consumer
  • Merchants are prohibited from surcharging consumers for the use of electronic payment instruments such as credit and debit cards.
  • Local cards with magnetic stripes will be replaced with Chip and Pin cards
  • A monthly and annual statement is to be provided by the bank, free of charge, to the account holder.
  • Consumers enjoy a 13 months refund right for unauthorised transactions. This has been extended to also include payments originating via a third party

The aim of PSD2 is to make both electronic payment transactions and instruments safer, faster and as efficient as possible for both the service providers and consumers.

For more information, contact our team at Firstbridge.