EU Bodies Agree New Rules Amending Payment Fraud Safeguards

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The European Council and the European Parliament have provisionally agreed on plans to overhaul the EU’s payment services framework, introducing a new Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3).

The new rules aim to coordinate payment services across the EU and do more to protect customers from modern fraud trends, such as scammers pretending to be customers’ trusted banks or payment service providers (PSPs). 

PSPs will need to exchange data on fraud between themselves, verify payee IBANs match the intended account holder’s name, and apply comprehensive customer authentication. If they fail to do so, PSPs will become liable for any losses.

The reform also aims to improve transparency. ATM operators will be expected to clearly show all fees and exchange rates before a withdrawal, while card-payment firms will need to clearly communicate any merchant charges.

To protect cash-dependent consumers, retailers will need to offer cash withdrawals (without requiring a purchase) via chip-and-PIN, capped at €150.

The amendments also open the door to broader competition by lowering market barriers for open banking services. Regulated open banking providers will gain more consistent access to account data on a non-discriminatory basis.

German MEP René Repasi said of the agreement: 

Consumers will benefit from new harmonized rules on the payment services regulation. Mandatory fraud preventive measures will be applied and lead to less payment fraud. Banks have to share more of the burden if they fail to do their part. Today’s deal is a win for the Parliament by establishing a liability provision for online platforms where fraud started. In certain cases, they now have to reimburse banks who have reimbursed defrauded customers.

The EU Parliament and Council still need to formally adopt the legislative texts.