Regulation Guide

What Is the Payment Services Directive?

Guide to the Payment Services Directive (PSD2). Understand how EU payment regulations affect AML compliance, open banking, and financial services.

Understanding PSD2

The Payment Services Directive (PSD2) is EU regulation governing electronic payment services, promoting competition, innovation, and security.

PSD2 creates new payment service providers subject to AML obligations and introduces strong authentication requirements.

Key PSD2 elements

  • PSD2 Overview

    EU regulation governing electronic payments, enhancing consumer protection, security, and enabling open banking.

  • Open Banking

    Banks must provide third-party access to accounts (with consent), enabling new payment services and competition.

  • Strong Authentication

    Two-factor authentication required for electronic payments, reducing fraud and unauthorized transactions.

  • AML Implications

    New payment providers face AML obligations. Enhanced transaction monitoring needed for open banking flows.

Common questions

Does PSD2 apply in Australia?

PSD2 is EU regulation, but Australian businesses serving EU customers must comply. Australian open banking follows a similar model.

How does PSD2 affect AML?

Creates new AML-obligated entities (payment institutions), requires enhanced fraud monitoring, and changes data sharing for compliance.

What is Strong Customer Authentication?

Two or more factors: something you know (password), have (phone), or are (biometric). Required for online payments over certain thresholds.

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