What is PSD2?
PSD2 came into force 13 January 2018, but what exactly is it and what does it mean for you?
The revised Payment Services Directive 2 – or PSD2 for short – is a European directive aimed at levelling the playing field for payment providers, banks, building societies and financial institutions.
Following on from the original Payments Services Directive, PSD2 acts as a catalyst for introducing more secure and innovative payment services throughout Europe. Since 2018, PSD2 has opened competition within the European payment market. Adopted by the European Union, it is far wider reaching than its predecessor, PSD1.
You can read more about PSD2 and its implementation in the UK on the Financial Conduct Authority’s (FCA) website.
Why was PSD2 introduced?
It was implemented to ensure that the customer is at the centre of every transaction. While customer charges, fees and costs have, historically, been somewhat opaque and hard to gauge, PSD2 aims to change that, introducing transparency, minimum service requirements and clamping down on complaints procedures and data collection.
It should drive down overall costs for payment services.
Who does PSD2 apply to?
Most directly, firms providing payment services and their customers. In 2018, PSD2 required all payments institutions like WorldFirst, to be re-authorised and re-registered with their national regulators (in our case, the FCA and the DNB).
But consumers will also be affected and should benefit from the changes by taking greater confidence that their payments are being handled safely, effectively and securely and that the charges being levied are clear, fair and transparent. Under the new PSD2 rules the use of opaque pricing methods for cross-border payments within the EEA is prohibited – so you’ll know just how much you’re paying to move your money overseas.
How WorldFirst complies with PSD2
All WorldFirst customers who are within the EEA have been required to perform additional authorisation at the following stages online:
- Adding or managing beneficiaries
- Instructing a payment or booking a trade