On 14 February 2024, the European Parliament’s Economic and Monetary Affairs Committee issued a press release stating that it had adopted draft reports concerning the draft Directive on payment services and electronic money services in the internal market and the draft Regulation on payment services in the internal market. These pieces of draft EU legislation are commonly known as PSD3 and PSR.

The press release goes on to make the following comments.

Security of transfers

MEPs agreed that the unique identifier should be verified free of charge for credit transfers. Moreover, payment service providers (PSPs) should ensure strong customer authentication based on the use of two or more elements categorised as knowledge, possession or inherence and on a risk assessment. In addition, PSPs should ensure strong customer authentication based on the use of two or more elements categorised as knowledge, possession or inherence and on a risk assessment. Where a PSP fails to have in place adequate fraud prevention mechanisms, it will be responsible for covering customer’s losses which result from fraud. This responsibility for damages can also extend to technical service and IT solution providers, and online platforms can also be liable where they were informed about fraudulent content on their platform but did not remove it.

Security of data

When provision of payment service entails the processing of personal data, MEPs have confirmed this should only happen with the permission of the customer. As such, customers should be able to opt out from data sharing with third parties.

Transparent charges

MEPs have confirmed that customers should be informed about all charges, prior to the initiation of a payment transaction in a clear, transparent and accessible manner.

Better access to cash

To assure better access to cash, retail stores providing cash independently from a purchase (up to EUR 100) should be exempt from the rules. Similarly, ATMs that enable cash withdrawals, but do not service payment accounts, should be subject to a lighter registration process. 

New types of payment services

MEPs agreed that new players should be able to enter the EU payment services sector, subject to authorisation based on strict and comprehensive conditions.  To account for the rapid evolution of the retail payments market, it was deemed appropriate to update and clarify some definitions. This included the definition of ‘payment account’; which is now defined as an account used for both sending and receiving funds to and from third parties.

Authorisation process

All undertakings intending to provide payment services or electronic money services now have to apply for authorisation. An application should among others contain a business plan and set out the type of payment services envisaged as well as security, data protection and governance arrangements and a winding up plan in case of failure. In order to cover the risks posed by their activities, PSPs will need to hold minimum initial capital between EUR 50,000 and EUR 350,000 depending on the type of services they provide. MEPs agreed that existing payment and e-money institutions will not have to seek a new authorisation under the draft Directive but would follow a simplified process with their Member State competent authority.

Mark Belka (S&D, PL) responsible for the Regulation, said: “The Regulation touches upon various points, from more complicated issues such access to information by Fintechs to topics that we may come across each day, such as payment fraud or transparency of information in ATMs.” Furthermore, Ondrej Kovarik, (Renew, CZ), responsible for the Directive, said:  “Parliament’s position will ensure certainty and lower the burden for both PSPs and national competent authorities, particularly avoiding potentially cumbersome reauthorisation processes.”

Next steps

The European Parliament is expected to vote on both texts during the first plenary session in April, to be held on 10 and 11 April 2024. This will close the first reading without agreement with the Council of the EU. Negotiations between the European Parliament and Council are then expected to start after the European Parliament elections.