PSD3
Payment Services Directive 3
PSD3 is the proposed third EU Payment Services Directive, intended to replace PSD2 and strengthen fraud protection, authentication requirements, and open banking rules.
What is PSD3 (Payment Services Directive 3)?
## What it is
PSD3 (Payment Services Directive 3) is a package of proposals from the European Commission on regulating payment services in the EU. It proposes updates to the rules that govern payment institutions, acquiring, open banking, and the work of payment service providers (PSPs). The package includes the directive itself and a separate regulation (Payment Services Regulation). Some provisions are moved from the directive into a directly applicable regulation to reduce differences between countries.
## How it changes PSD2
PSD2 remains the operative framework until the new acts take effect. PSD3 targets several areas: verification of payee before a transfer, stronger liability for banks and providers for fraud involving impersonation of a bank or supplier employee, convenient customer dashboards where access granted to third-party services can be seen and revoked, and uniform rules for licensing and supervision.
## How it affects practice
For payment services and merchants in high-risk verticals, the key changes concern anti-fraud measures and authentication. Requirements for strong customer authentication (SCA) and transaction monitoring are expected to be clarified, and the exchange of data on fraudulent transactions between providers is expected to become more formalized. This may affect decline rates, payment conversion, and chargeback handling.
## Status and common mistakes
The package has been going through legislative negotiation between the European Parliament, the Council of the EU, and the Commission. The final text may differ from the original proposal, and entry-into-force dates and transition periods depend on the final version. A common mistake is assuming a rule is in force before its official publication in the EU Official Journal. Another is confusing PSD3 with PSD2 or with national requirements, which may be stricter.
FAQ
Is PSD3 already in force?
At the time of writing, it is a legislative package that is still being negotiated by EU institutions. Before working with payments, check the current status and the official text.
How does PSD3 differ from PSD2?
PSD2 is currently in force and sets the rules for open banking and strong customer authentication. PSD3 is meant to expand fraud protection, add payee verification, and clarify customer rights and provider regulation.
Why does PSD3 matter for high-risk merchants?
The changes affect authentication, anti-fraud monitoring, and the exchange of fraud data, which directly influence payment approval rates, chargeback levels, and acquiring terms.