Payment Services Directive (PSD) is a law of the payment services that was came into effect in 2009 for the first time and applied to the EU countries. After the revision in 2015, its name has been changed to the PSD2. With the first version, the PSD1, the European Union aimed at developing a more competitive, efficient, secure, faster and safer payment market, and make it sustainable for countries in the Union.
Novelties brought by the law included the following: An area was created within the applications of the payment system where the similar rules were held. Norway, Lichtenstein and Iceland also joined this area. A brand new payment service provider category was created in addition to bank transactions, and was called Payment Service Providers. The aim of Payment Service Providers was, therefore, to create more space for fresh blood in payment systems and to create competition among the banks.
This led to significant steps for SEPA (Single Euro Payment Area) Project. Besides, with this area created for many startups that work on financial technologies and focus on payment services and an accelerating function followed.
At this point, it is worth mentioning the service provider startups that emerged in European countries and have become globally popular. Some of the most popular ones are Transferwise, Onescan, Azimo, Judo, Earthport, Traxpay and Adyen. This list may be expanded with large and small startups. Even in Turkey, there are popular startups in accordance with the law 6493 such as ödeal, ininal and iyzico, which were able to finalize their adaptation process with the PSD1 and this accelerated their developments in four years.
Additional Novelties to PSD2 and PSD1
The PSD2 is in fact based on a regulation of 5 year revising of all the other laws made in the EU. The PSD2, which was accepted by the European Parliament on 8 October 2015, is regarded as a version that had the more improvements and coverage zone for Crossborder eCommerce compared to the PSD1 of 2007.
This new version of PSD2 was published in EU’s official newspapers on 23 December 2015 and was fully implemented on 12 January 2016. However, two years were given to the countries that just entered the EU in order for them to arrange their legal regulations according to the PSD2.
European Banking Authority must specify the technical standards related to the titles defined in the PSD2 in order for all the subjects in PSD2 to be clarified and fully be implemented. 2019, therefore, is regarded as the deadline for all the details to be legalized and fully implemented in the EU countries.
Novelties and Revisions of PSD2
- The framework of payment systems is getting beyond the EU’s boundaries. Therefore, payments that are made out of the EU also take place within the scope.
- Account Information Service Providers are carried into effect.
- Payment Initiation Service Providers have come to the fore.
- Criteria like Reinforced Protection and Recognition emerge during Crossborder eCommerce payments and access to financial accounts.
Payment Service Providers mentioned at length in the PSD1 is bringing new security criteria to service providing activities in the PSD2. As the service areas can be carried outside the EU, startups with extensive scopes can also be included in the system. Besides, it has also become compulsory for payment systems provided by the banks to open their services to third parties via API’s.
Advantages That the New Service Provider Will Offer
With the new system, all the transactions, which the employees working for the treasury departments of the companies made through the banks the company has worked with, are now accounted. Thanks to this, managers of the firms can observe every activity through accounting departments in a consolidated way. To put it another way, they are able to keep the account of the company’s money transparently.
With the PSD2, all the banks have to ask for the consent of the account owner, before they share all the actions of the account owner with the third parties via API’s. Thus, the accounts of company managers that are in different banks or companies are gathered in a format that can be consolidated under a single roof. In other words, with the PSD2 new regulations are on the way, protecting the rights of the companies that will make sales in Europe and help them make their transactions more easily.