PSD3, PSR1, and FIDA

The European Union’s proposed Third Payment Services Directive (PSD3), First Payment Services Regulation (PSR1), and Financial Data Access Framework (FIDA) aim to refine the payments regulatory landscape. Previous directives, PSD1 and PSD2, required each EU member state to translate requirements into national law, leading to regulatory fragmentation due to varied local interpretations. The European Commission’s key objectives with these new proposals include addressing this fragmentation, increasing consumer fraud protections, expanding open banking adoption, and leveling the playing field between bank and non-bank payment platforms.

The European Union’s new payment regulations aim to create a unified market, reducing fragmentation and increasing competitiveness.

PSD2 will be replaced with PSR1, a regulation that takes direct effect without needing unique local laws, ensuring uniformity across member states. PSD3, more limited in scope, focuses on harmonizing non-bank payment providers’ licensing and regulatory treatment under PSR1. FIDA enhances PSD2’s open banking requirements, expanding the scope of open banking and introducing mandatory consumer consent dashboards and incentives for greater participation.