- PSPs in the EU will be liable for customer loss if they do not have adequate safeguards in place
- Sending PSPs must verify account information, receiving PSPs must freeze suspicious payments
- The EU also calls for greater fee transparency and access to cash
The European Parliament and the Council have agreed on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3), with the aim of both protecting customers from 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 making mandatory checks to ensure that the payee’s name matches the account ID; mismatch must lead to rejected payments to prevent loss in the first place.
The EU wants the banks to boost the prevention of fraud
PSPs must also offer strong customer authentication, while spending limits and blocking tools must be available to users.
On the flip side, recipient PSPs must freeze suspicious transactions to prevent money from being deposited into a risky account.
PSPs must also fully reimburse losses caused by false identity if the victim customer reports it to the police and informs their bank.
“Today’s agreement is a victory for the Parliament by establishing a liability provision for online platforms where fraud started,” noted regulation rapporteur René Repasi.
But it’s not just about preventing fraud, because the EU is also calling for greater transparency around fees. For example, all fees, including currency conversions and ATM fees, must be disclosed before payment is received.
The European Union also wants to improve access to cash in an increasingly digitized world by offering retail stores permission to process cash withdrawals of €100-€150 without requiring a purchase.
To further strengthen competition in this market, the EU is calling for reduced barriers to open banking, while clear user dashboards to manage data access permissions give customers more control.
“This agreement is a significant step towards a more open and resilient internal market for payments,” explained directive rapporteur Morten Løkkegaard, adding that “cash remains a genuine and convenient payment option.”
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