EU Bolsters Payment Security

The European Parliament and Council have recently reached an agreement that promises enhanced protection against online fraud and more transparent fee structures for payment services across the European Union. This landmark deal, achieved on Thursday morning, focuses on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3), aiming to create a more competitive and secure environment for payment service providers and their users.

The newly agreed regulations mandate rigorous fraud prevention measures that hold payment service providers (PSPs) accountable for any losses due to inadequate security. Under the new directive, PSPs must verify the accuracy of payee information before processing transactions and implement strong customer authentication protocols. Additionally, any suspicious or unauthorized transactions must be reported and handled immediately, with PSPs required to cover the full amount of any fraudulent transactions.

Transparency in fees is another significant aspect of the agreement. Customers will now receive detailed information about all applicable charges before initiating a payment. This includes data on currency conversion fees and fixed fees for cash withdrawals at ATMs, irrespective of the operator. Furthermore, to improve access to cash, especially in underserved rural areas, the regulation allows retail stores to offer cash withdrawals between €100 and €150 without necessitating a purchase.

The agreement also includes provisions to foster competition and innovation within the EU’s payment services sector. It reduces market barriers for open banking services and prevents account-servicing payment service providers from unfairly restricting access to payment account data. In addition, mobile device manufacturers and electronic service providers are required to ensure fair and non-discriminatory data transfer conditions for payment processing apps and interfaces.

The deal now awaits formal adoption by both the Parliament and the Council before it can be implemented. Once in force, these changes are expected to significantly reduce payment fraud and provide EU citizens with safer and more accessible payment options.