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VALLETTA - GTG #fintech team, led by Partner Ian Gauci is pleased to provide you with the legal update on European Union's new proposal to regulate electronic payments.
On 28 June 2023, the European Commission published several proposals, whereunder proposals for the Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR). Their predecessor, the Payment Services Directive 2 (PSD2), was introduced with the aim of revolutionizing the (EU) payment market by improving user protection, promoting innovation and creating a level playing field for payment service providers (PSPs). However, PSD2 had some shortcomings and new regulation was necessary to keep up with the fast evolvements in the world of payments.
Here is the update and what it means:
The PSD3, is an upcoming framework being proposed by the European Commission that aims to regulate electronic payments and the banking ecosystem within the European Union and the single market with a forward looking approach to cater for the digital age.
The proposed framework branches from a previous PSD3 consultation, which had three separate initiatives: a public consultation, a targeted consultation on the technical aspects of PSD2, and a targeted consultation on open finance including open banking which came to an end on August 3, 2022.
Following the latter consultations, the EU now has just laid out its new proposed PSD3 framework which intrinsically includes a proposed new payment services regulation (PSR), a separate draft directive consolidating e-money institutions rules with those applicable to payment services (PSD3) and a legislative proposal on a framework for financial data access, extending financial data access and use beyond payment accounts and which builds on existing data access rights that apply in the payment services market and, more generally, under existing data protection laws.
The new proposed framework quintessentially fulfils a pledge from the Commission's 2020 Retail Payments Strategy by ensuring that the regulations governing the EU retail payments industry remain fit for purpose, taking market changes into account, and fostering the growth of immediate payments in the EU.
The main aim of this new proposed framework can be briefly summarised as follows:
Tangibly, the proposed framework aims to achieve its objective by enforcing as well specific user rights particularly around their data, and thus it provides explicit rights and duties to regulate consumer data sharing namely through :
The proposed framework also introduces new obligations on account servicing payment service provider (ASPSP) and new rights for 'payment initiation service providers' (PISPs). Some of the new obligations for the ASPSP and rights of PISPs include :
The aim of this new proposed framework is very ambitious and itβs an important step to further consolidate the EU single payment market and imbue the proposed new payment regulations with the right elements to embrace the digital age.
This proposed framework however is still in early stages and has a long way to go as it still needs to pass through the EU Council and EU Parliament for the first agreed drafts to then proceed to trilogue procedure, where the Commission, Council and Parliament will have to agree on a compromised text and which most likely happen next year.
Disclaimer
This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.