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What PSD2 means for your business

Merchants are asking questions about PSD2. Rightfully so—the initiative is transforming payments across the European market. They’re asking, why is PSD2 important? What does PSD2 mean for merchants? Who enforces PSD2, and when does it take effect?


A new report by Worldpay answers these questions and many more.

Here, we’ve answered a few of the more frequently asked questions from merchants about PSD2. For further learning, we examine PSD2’s changes and opportunities with Worldpay’s PSD2 expert Charles Damen, and explore an important new approach to payment authentication in our blog on 3DS2 with Worldpay’s Mark Dobinson. You will also find a variety of other resources to help you understand what you need to do and if your business is prepared.

What is PSD2?

The European Union’s (EU’s) second revision of the Payment Services Directive (PSD2) is a set of changes that regulates electronic payments throughout the EU. 

The legislation’s key innovation is establishing a framework to make consumer banking data available—with consumer permission—to third parties such as retailers and financial technology companies. This allows non-bank parties (like a retail merchant) to initiate payments without the intervention of traditional card brand networks.

In short, PSD2 creates a legislative framework that allows more ways to easily exchange payments more securely than ever before.

Why was PSD2 created?

PSD2 was established by the European Commission (EC) aiming to stimulate competition, facilitate innovation, increase efficiency, enhance security and reduce fraud in the retail payment market.

The development of the original Payment Services Directive could not possibly have envisioned the revolutionary changes in payment technology in the decade since its enactment. PSD2 accounts for the explosive growth of FinTech companies, dramatic global shifts by consumers toward eWallets, the rise of alternative payment methods such as bank transfers, and elevated expectations for consumer privacy.

Where does PSD2 apply?

The revised Payment Services Directive applies to any payment where the cardholder’s issuer and the acquirer for that transaction are inside the European Economic Area.

Who does PSD2 affect?

PSD2 impacts virtually everyone living or working in EU countries. If you are involved in the buying and selling of goods and services in the EU, P2D2 affects you.  If you make a payment, receive payment, or are in any way involved in retail payments, P2D2 aims to make those processes transparent and safe.

Consumers, financial institutions, and the payments industry that binds them are all affected by PSD2. PSD2 legislation specifies rights and responsibilities for groups including:

  • Third party payment service providers (TPPs)
  • Payment initiation service providers (PISPs)
  • Aggregators and account information service providers (AISPs)

What about PSD1?

The first Payment Services Directive (PSD1) came into force in December 2007. PSD1 set forth rights and obligations and established a common framework for payment services. The directive replaced the national payment rules for individual EU countries and was in effect from November 2009 to January 2018, when it was repealed and replaced in its entirety by PSD2.

When did PSD2 come into force?

Key events in the PSD2 timeline have recently past, while one remains on the horizon:

  • 13 January 2018: The majority of PSD2 regulations took effect
  • 13 March 2018: The Commission published PSD2 new security standards: the Final Regulatory Technical Standard (RTS) on Strong Customer Authentication (SCA) and Common and Secure Open Standards of Communication
  • 14 September 2019: The newly published RTS and SCA regulations come into effect.

How can I best prepare my business for PSD2?

PSD2 poses tremendous opportunities for merchants. Becoming compliant is an important baseline, and your payments partner can help. Beyond the requirements, PSD2 embodies changes in payment technology that open new doors for businesses to excite their customers.

Merchants today are able to make better decisions driven by data insights and offer seamlessly elegant user experiences, all while reducing costs. To learn more about how your business can master PSD2, we invite you to  explore the resources below, and to reach out to one of Worldpay’s payments experts.

Ready to talk about getting your business ready for PSD2?

Speak with us today to get your business ready for PSD2. We’re a global leader in payment technology and we’re at the forefront of regulatory activity and in constant contact with EU and UK regulators and authorities. Together, we can use the new PSD2 regulation to help you get ahead.

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