What is the Second Payment Services Directive (PSD2) and why is it important to you?

With the arrival of the PSD2, all EU and UK authorised firms must re-apply to their financial regulator in order to retain their license. Payment Institutions and Electronic Money Institutions are tasked to ensure that they have implemented new IT rules, security protocols and further enhanced compliance if they wish to be able to continue to provide their services. 

A brief example of some of the IT rules are: 

• Procedures for monitoring security incidents 
• Handling security related customer complaints 
• Implementing incident reporting systems 
• Managing the data for sensitive payments
• Detailed Business Continuity Planning 
• Risk assessments 
• Identification of fraud risks 
• Management of personal data 

Why the need for PSD2? 

• The new rules are designed to make Payment Institutions enhance and review business performance 
• The new requirements could work to improve the security of your business and so in turn improve the attractiveness of your business to customers, thus making the sector more viable and safer amidst the current market climate 
• You can make online payments to merchants without going through PayPal or Visa 
• Stronger ID checks on your customers to ensure security and fraud prevention 
• Breaking down the monopoly of the banks who will have to share customer data with merchants 
• Banks should share their API with licensed firms to facilitate payments and other functions 

What does PSD2 say about hidden fees? 

The PSD2 prohibits the use of non- transparent pricing methods for international payments. What this means is that banks and brokers cannot hide costs in the form of poor exchange rates which are much lower than the market rate seen on Google.