ECON Committee Gives Green Light To PSD3/PSR

February 15, 2024
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Lawmakers on the Economic and Monetary Affairs committee celebrated Valentines’ Day by voting through both the Payment Services Directive and Payment Services Regulation (PSD3/PSR).

Lawmakers on the Economic and Monetary Affairs committee celebrated Valentines’ Day (February 14) by voting through both the Payment Services Directive and Payment Services Regulation (PSD3/PSR).

Members of parliament's (MEPs) amendments to the two legislative files were adopted with the PSR being voted through 39 votes to one, with three abstentions, and the PSD3 adopted with 37 votes to one and six abstentions. 

Lawmakers broke into a round of applause after ECON chair Irene Tinagli announced the results. 

“With the Parliament's proposal we put the citizen in the centre, while at the same time outlining a framework for a true level-playing field in the European Single Market for payments,” said Marek Belka, rapporteur for the PSR.

Belka explained that the PSR touches upon various points, “from more complicated issues such access to information by fintechs to topics that we may come across each day, such as payment fraud or transparency of information in ATMs”.

“We cover it all by expanding and supporting the Commission's proposal."

Ondrej Kovarik, the rapporteur for the PSD3 file, said that “it is important to have a smooth transition from PSD2  to the upgraded payments package”. 

“Parliament's position will ensure certainty and lower the burden for both PSPs and national competent authorities, particularly avoiding potentially cumbersome reauthorisation processes.”

“The aim is to support and expand the Commission proposal,” he said, echoing Belka. 

What was agreed?

The compromise text looks to make life easier for e-money and payment institutions, in a way that the proposal did not. 

For example, MEPs agreed that existing payment and e-money institutions will not have to seek a new authorisation under the directive, but would follow a simplified process with their competent authority.

Among the compromises made, MEPs also agreed that the unique identifier (a combination of letters, numbers or symbols specified by a payment service provider (PSP) or a user, such as IBAN) should be verified free of charge for credit transfers.

Moreover, PSPs should ensure strong customer authentication based on the use of two or more elements categorised as knowledge, possession, or inherence and on a risk assessment.

Fraud liability extensions have also made it into the compromise text. In the PSR proposal, the European Commission said that where a PSP fails to have in place the appropriate fraud prevention mechanisms, it will be responsible for covering customers' losses resulting from fraud. 

The European Parliament has extended this, and said that technical service and IT solution providers could also be held responsible for damages, up to the transaction amount, caused by a failure, within the remit of their contract. 

Further, online platforms would be liable if they were informed about fraudulent content on their platform and did not remove it. 

This could mean the likes of Meta and TikTok having to reimburse customers if they are found not to have put in place preventative measures, which is something that is likely to please some PSPs who have become aggrieved that they are fully liable for authorised push payment (APP) fraud. 

The agreed text also expands the right to refund to cases of “spoofing” where fraudsters pretend to be from a customer’s bank. 

Here, MEPs extended that right to cases where fraudsters pretend to be from other types of organisation.

Parliamentarians also called for member states to invest substantially into education on payment-related fraud, through a media campaign or lessons at schools.

In the PSD3, MEPs voted in favour of more transparency for consumers when it comes to payment transactions. 

The Parliament’s position says that customers should get, for example, information about currency conversion charges or any fixed fees for cash withdrawal.

Going forward, MEPs beyond the ECON committee are due to vote on both texts during the first plenary session in April. 

Negotiations between the Parliament and its counterparts in the European Council are then expected to start after the elections in early June. 

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