Finance Minister signs EU regulations designed to protect consumer payments

It will allow third-party payment providers access to bank account details with a customers permission.

The introduction of open banking is designed to break the monopoly banks have on personal account data.

"PSD2 will ensure that consumers have stronger rights and greater choice when using payment services," said Minister Donohoe.

"The main changes introduced by PSD2 are the addition of two new categories of payment services providers to be regulated, greater protection for consumers, and the introduction of new rules on strong customer authentication and secure communication which are intended to make payments safer," he added.

The measures could reduce the need for a credit card and introduce more direct transactions between customers and retailers.

"Banks had a monopoly over the data inside [current accounts] up until now. This data will now be shared with many third parties, only with permission and an awful lot of security around it," said PwC Partner Sinead Ovenden.

"As a result of that, you're going to have a lot of new entities which will be regulated and have authority to use that information to create new products and services," she added.

The regulations build on the framework first established by the original Payment Services Directive[2] in 2007, which introduced changes to address the rapid growth in the number of electronic and mobile payments and the emergence of new types of payment services in the marketplace.

The main changes introduced by the new rules include the:

• Introduction of strict security requirements for the initiation and processing of electronic payments and the protection of consumers' financial data;
• Opening the EU payment market for companies offering consumer or business-oriented payment services based on access, with consent of the account holder, to payment accounts – the so called "payment initiation services providers" and "account information services providers";
• Enhancement of consumers’ rights, including a reduction in the liability for non-authorised payments to €50 (previously €75) and insertion into legislation of an unconditional refund right for direct debits in euro for consumers;
• Prohibition of merchant surcharging on consumer-held credit or debit cards covered by the Interchange Fee Regulation (the vast majority of consumer credit and debit cards), whether the payment instrument is used in shops or online; and
• Expansion of the scope now that PSD2 extends to payment transactions in non-European Economic Area currencies and to ‘one-leg’ transactions (payment transactions where only one of the payment service providers is located within the European Economic Area), and a narrowing of the payment transactions and services which are excluded.

A small number of provisions will come into operation 18 months from the date the regulatory technical standards on strong customer authentication and common and secure open standards of communication enter into force.