Friday, June 30, 2023
On June 28, the European Commission proposed revisions to the EU's Payment Services Regulation and Payments Services Directive. Designed to help financial stakeholders adapt to digital transformation, the package seeks to leverage adjacent opportunities and mitigate risk, according to Malread McGuinness, commissioner for Financial Services, Financial Stability and Capital Markets Union.
"Today we are taking concrete steps to [modernize] not only the EU's retail payments industry but the financial service sector as a whole," McGuinness said in a statement. "In doing so, we are putting the best interests of citizens and consumers at the heart of financial services."
McGuinness further noted that every financial transaction creates new data, and this new set of measures enhances consumer protection and hardens security to enhance protections and remedy payment fraud. In addition, he explained, the proposal ensures that "customers and businesses benefit from more innovative payment and financial service options, whilst being confident that these are offered in a safe, transparent and secure way."
Valdis Dombrovskis, executive vice president for An Economy that Works for People, agreed, stating data-driven innovations are moving Europe to a true digital economy.
"More sharing of personal data, while retaining full control over it, will allow people to access tailored products and services that suit their needs, and also create room for the financial industry to innovate," he said. "Today's proposals set strict conditions on rights and obligations for open data-sharing to protect privacy, and to give full control to customers over access to their data and how it is used."
Dombrovskis noted the same underlying principles apply to new data technology developments in payment services. These principles of boosting consumer protection and mitigating fraud will facilitate "the best and cheapest payment service," he stated.
The EC noted that the June 28 proposal is part of a broader framework, introduced in 2020 as the Retail Payments Strategy, designed to keep the EU in sync with market developments while paving the way to instant payments. It also complements the EC's 2022 proposal to make instant payments in euro available to individuals and businesses that hold bank accounts in Europe and EEA countries, the organization added, stating these changes will benefit consumers and business owners alike.
"Previously burdensome processes such as comparison services or switching to a new product will become smoother and cheaper, including for example, automated processing of mortgage applications," the EC wrote. "SMEs would also be able to access a wider range of financial services and products, such as more competitive loans resulting from their creditworthiness data being more easily accessible."
Additional guidance for financial data access further supports the EC's 2020 Digital Finance Strategy and European data strategy that introduced key principles for data access and processing, including the Data Governance Act, Digital Markets Act and the Data Act proposals, the EC stated.
Todd Clyde, chief executive officer at Token.io, an account-to-account payment infrastructure, expressed support of the PSR and PSD3 initiatives.
"Today's publication of the European Commission's proposals for a revised regulatory framework for payment services is an exciting development for the payments industry, demonstrating commitment to creating an even stronger foundation and infrastructure for open banking powered pay-by-bank solutions in all European markets," he said, praising specific provisions that increase adoption and use of open banking APIs.
Clyde went on to say that API-based interfaces provide a secure way for third-party providers (TPPs) like Token.io to interface with banks and support delivery of innovative services for end users. In addition, he noted that formalizing the minimum baseline functionality required from banks' open banking interfaces will help level-up the financial ecosystem's overall performance.
"Both the PSR/PSD3 and Financial Data Access (FIDA) proposals are setting in motion a future for open finance in Europe by unlocking possibilities for innovation across the financial services and other industries," he said.
Additional details on the EC's proposals are available at ec.europa.eu/commission/presscorner/detail/en/ip_23_3543
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