The revised payment service directive (PSD2) is an update of the existing PSD1, which was introduced in 2007 and provided a single market for making payments in the European Union (EU).
Soon after the introduction of the initial PSD, many new service providers introduced new ways to make online payments. As the open banking system gained recognition in the European market, small businesses and consumers engaged with new financial services and applications. Since the number of new players increased, the EU recognised the need for an update. PSD2 was implemented with an intention to enhance innovation and create competition in the banking sector.
This directive also aims to make online payments safer for customers, improve the protection of consumer information, address payment fraud, and provide a common platform for competitors.
We have put together an infographic for you on PSD2. It covers the implementation date, the key players involved, the main changes, and an introduction to strong customer authentication (SCA).