A Guide to Financial Regulation for Fintech Entrepreneurs

SHEET 17Payments Services Directive

Payments Services Directive—The directive regulating institutions providing payments services in the EU

Summary

PSD 2 is the 2015 revision of the EU Payments Services Directive, taking into account the recent development in the payments space, especially with relation to Fintech companies. Together with the Electronic Money Directive it defines the requirement for all players in the electronic payments market, both incumbents and new entrants.

It defines new roles, in particular that of the PISPs who initiate payments on behalf of customers, and that of the AISPs who can aggregate account information on behalf of customers, both without actually running any payment accounts. This regulation defines minimum standards in terms of conduct and security to which those players must adhere. It also puts a requirement on incumbent players to open up their systems, and give those new players non‐discriminatory access to their APIs, thereby encouraging innovation in the payments space.

Relevance for Fintech Companies

A lot of Fintech players are active in the payments space, and for them this directive is very important. A key point here is the establishment of AISPs and PISPs to whom banks must grant API access to customers' payment accounts, provided the customers agree that, and provided the companies fulfil certain conditions, in particular with respect to security.

This is a good example of a two‐edged sword that Fintech companies must be ...