According to TechSpot, the European Parliament and Council have finalized a deal on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3). The new rules force payment service providers (PSPs) like banks to refund customers for fraud losses if the PSP fails to implement appropriate anti-fraud measures. They must also perform stricter identity checks and block suspicious transactions. Furthermore, providers must now disclose all fees, including currency conversion rates and ATM charges, before a transaction begins. The rules also aim to improve cash access, allowing withdrawals of €100 to €150 at retail stores without a purchase. The legislative bodies must now formally adopt the rules before they come into full effect.
The Burden Shifts to Banks
Here’s the thing: this is a massive shift in liability. For years, the onus has largely been on the consumer to be vigilant. Click a bad link? Fall for a convincing phishing email? Tough luck, that’s often been the response. Now, the financial incentive is squarely on the banks and payment processors. If their systems aren’t “appropriate” and fraud gets through, they’re on the hook. That’s a powerful motivator to invest in better security tech and more rigorous verification processes. It basically turns fraud prevention from a cost center into a direct financial imperative. I think we’ll see a scramble to upgrade systems across the board in the EU.
Transparency as a Weapon
And then there’s the fee disclosure rule. This seems simple, but it’s huge. How many times have you made an international payment or used an ATM abroad only to get hit with a nasty surprise on your statement? The hidden margin on currency conversion is a classic profit center. Forcing providers to show the total cost upfront, in real-time, before you confirm the payment? That’s going to create real price competition. Consumers can finally make an informed choice. It turns opaque fees into a competitive disadvantage, which is exactly how it should be.
The Open Banking Push
Now, the EU insists this won’t create more bureaucracy. In fact, they’re pitching it as a boost for “open banking.” The rule that bans banks from discriminating against third-party payment initiation and account info services is a big deal. It forces traditional financial institutions to play nice with fintechs. Want to use a slick budgeting app that needs your transaction data? The bank can’t unreasonably block it. This could accelerate innovation in financial services, creating a more integrated and user-friendly digital finance ecosystem in Europe. But let’s be real—getting legacy banks to happily share data and access won’t be frictionless. There will be pushback.
Broader Implications and What’s Next
So what does this mean for the future? First, it sets a precedent other regions will watch closely. Consumer protection agencies in the US and elsewhere will point to this as a model. Second, it intertwines financial regulation with digital platform accountability, thanks to the link to the Digital Services Act. Large platforms hosting fraud could face consequences from payment providers. That’s a new kind of pressure. Finally, the cash access rule is a fascinating nod to financial inclusion, ensuring digital progress doesn’t leave rural areas completely behind. The formal adoption is the next step, but the direction is clear: the EU is putting consumers first and telling the financial industry to adapt. It’s a significant power rebalance.
