How do you comply with PSD2 and GDPR when offering payment services in the EU?

In navigating PSD2 and GDPR compliance for payment services in the EU, the practical approach is twofold: robust security and transparent customer communications. Drawing from my experience at White Internet Consulting, where we integrate these regulations into our project management frameworks, a proactive stance on compliance not only mitigates risks but also enhances trust. For instance, implementing strong customer authentication (SCA) isn't just a regulatory requirement—it's a cornerstone of securing digital transactions and building consumer confidence. Additionally, open banking, a key feature of PSD2, should be leveraged not as a compliance burden but as an opportunity to innovate and improve service offerings.

Garantir a conformidade com o PSD2 e o GDPR ao oferecer servi?os de pagamento na UE exige uma abordagem cuidadosa e focada em prote??o de dados. Recentemente, ajustes foram feitos nas opera??es para atender os requisitos de autentica??o forte (SCA) do PSD2, utilizando múltiplos fatores de verifica??o em cada transa??o. Paralelamente, as práticas de prote??o de dados pessoais foram refor?adas de acordo com o GDPR, garantindo o consentimento explícito dos usuários e a seguran?a de suas informa??es. Esse equilíbrio entre inova??o e seguran?a é essencial para construir confian?a.

PSD2 has been a real game-changer for anyone in the payments industry, especially within the EU. From my experience, it’s more than just a set of rules—it’s an opportunity to innovate and build deeper trust with customers. Open banking has allowed us to explore new collaborations and create services that weren’t possible before. And the emphasis on Strong Customer Authentication (SCA) has made us rethink and strengthen our security measures. For businesses in this space, understanding PSD2 isn’t just about ticking boxes for compliance; it’s about staying ahead in a fast-moving market.

PSD2 regulates most operators and activities within the banking, payments and electronic money sectors. It is European-wide (even though the UK is no longer within the EU it is the same framework applied to UK and Gibraltar PSPs). It can even apply to non-European PSPs if they have sufficient nexus within the EU. It matters because it provides many consumer-focused protections and features in addition to enabling open banking data flows and a high level of payment security. Consumer protection is at the heart of the regime and some of the strongest provisions are in relation to limiting liability for unauthorised transactions. The requirements relating to safeguarding of customer funds are also essential to understand for any PSPs.

PSD 2 had profound impact on traditional banking, challenging traditional business models and prompting changes in the industry. Here key ways in which PSD2 affects traditional banks are as follows: 1) Competition: - banks are required to provide TPP, with access to customer account information and payment initiation capabilities through open APIs. With increased access to financial data, customers have more options to choose from a variety of services. This forces traditional banks to compete on the basis of customer experience, pricing, and the quality of their services. 2) Innovation: - Increased competition leads to inclusion of personalised financial management tools, improved payment solutions, and other value-added services.

GDPR has really reshaped how we think about data protection. It's more than just a legal requirement—it's about respecting our customers and their right to privacy. In my experience, GDPR has pushed us to be more transparent and thoughtful in how we collect, use, and store personal data. It’s also driven us to tighten our security measures and be more proactive in managing data responsibly. Rather than seeing it as just another compliance task, we’ve embraced GDPR as a way to build stronger, trust-based relationships with our customers.

GDPR is a set of privacy rules in the EU to protect people's personal data. Compliance ensures secure handling of customer info, building trust and avoiding fines for mishandling data.

If you're a UK payment service provider (PSP), you'll know that post-Brexit PSD2 has been largely "on-shored" in the UK. What remains to be seen though, is will or won't the UK follow prospective changes to be made in the third payment services directive (PSD3)? PSD3 is tipped for 2025 and one of the expected key changes is that the directive will harmonise the regulatory landscape for both payment and e-money institutions in the EU. It's worth keeping your eyes peeled and seeing how the UK reacts.

Complying with both PSD2 and GDPR can feel like walking a tightrope—balancing data sharing with security. PSD2 mandates that payment service providers (PSPs) share data with third-party providers (TPPs), but GDPR demands customer consent and tight data protection. Here’s the trick: Start with a gap analysis to identify compliance risks, then implement strong customer consent management and secure authentication (SCA). Keep your customers informed and in control, allowing them to modify or withdraw consent anytime. Ultimately, stay agile—compliance is ongoing, not a one-time fix!

My advice: Prioritize transparency and security to build trust and avoid penalties. For PSD2 and GDPR compliance, get clear consent before handling payment data, use strong authentication for secure transactions, protect customer info according to GDPR, communicate transparently, and conduct regular audits to stay on track.

Cumprir com o PSD2 e o GDPR pode ser desafiador, mas é essencial para oferecer servi?os de pagamento seguros na UE. Recentemente, tive que garantir que nossa empresa estivesse em total conformidade com esses regulamentos. Realizei uma análise detalhada para identificar lacunas e implementei a Autentica??o Forte do Cliente (SCA) para transa??es online. Gerenciei consentimentos de clientes e protegi dados contra acessos n?o autorizados. Essa experiência refor?ou a importancia de monitorar constantemente a conformidade e estar preparado para demonstrar nossa ades?o aos regulamentos quando necessário. Foi um processo rigoroso, mas garantiu a confian?a e seguran?a que nossos clientes esperam.

PSD2 and GDPR, while distinct regulations, work in concert. A nuanced understanding of both is essential to ensure compliance. Demonstrating a clear commitment to fulfilling these regulations is paramount to avoid any tricky situations. Partnering with legal and implementation experts is crucial to navigate these complexities

When dealing with PSD2 and GDPR compliance in the EU, it’s all about balancing the need for data sharing with customer privacy. A gap analysis is a must to identify any vulnerabilities in your compliance approach. Then, implement Strong Customer Authentication (SCA) for secure transactions and ensure customers are fully informed about data usage, with the option to withdraw consent whenever they choose. From my experience, clients who proactively communicate with customers and audit regularly not only stay compliant but also build trust, turning compliance into a competitive advantage.

PSD3 is currently under consultation, as the European Commission seeks input from stakeholders to ensure that the standard takes into account all market developments. For now, more than a few voices are questioning whether Europe needs a PSD3. Here are some of the areas that will be addressed ?? Less friction in online payments. ?? Unregulated activities in the market (e.g., BNPL, cryptocurrencies, digital wallets). ?? Improve the transparency of cross-border payments and fees.

1) When providing payment services implement Anti-Money Laundering and Know Your Customer procedures to meet regulatory requirements and prevent financial crime fit to the scale of the business. 2) PSD 3 || FIDA || PSR around the corner: increased consumer protection, new tools to combat fraud, improved functioning of open banking and facilitating the market entry of providers offering innovative payment services - these are the main assumptions of the draft EU regulations for the payment services sector, which was published 28 June 2023 and is subject to further works in the EU legislative process.