- EU PSPs will be liable for customer losses if they do not have sufficient guarantees
- Sending PSPs must verify account details, receiving PSPs must freeze suspicious payments
- The EU is also calling for greater transparency of fees and better access to cash.
The European Parliament and the Council have reached agreement on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3), with the aim of both protecting customers against losses and improving access to banking services and cash.
Under the new rules, payment service providers (PSPs) will be liable for customer losses if they fail to implement adequate fraud prevention measures.
This includes carrying out mandatory checks to ensure the beneficiary name matches the account ID; mismatches must lead to rejected payments to avoid losses in the first place.
EU wants banks to step up fraud prevention
PSPs must also offer strong authentication to customers, while spending limits and blocking tools must be available to users.
On the other hand, receiving PSPs must freeze suspicious transactions to prevent funds from being deposited into a questionable account.
PSPs must also fully reimburse losses caused by identity theft if the victim customer reports it to the police and informs their bank.
“Today’s agreement is a victory for Parliament in establishing a liability provision for online platforms where fraud began,” noted regulatory rapporteur René Repasi.
But it’s not just about fraud prevention, as the EU is also calling for greater transparency when it comes to fees. For example, all fees, including currency conversions and ATM fees, must be disclosed before payment is made.
The European Union also wants to improve access to cash in an increasingly digitalized world, by allowing retail stores to make cash withdrawals of 100 to 150 euros without requiring a purchase.
Further increasing competition in this market, the EU calls for reducing barriers to opening the banking system, while clear dashboards to manage data access permissions give customers more control.
“This agreement is an important step towards a more open and resilient single payments market,” explained the directive’s rapporteur Morten Løkkegaard, adding that “cash remains a real and practical payment option.”
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