Payment Services Directive 2 (PSD2)

is an EU Directive (2015/2366/EU) which builds on the legislative framework established by PSD 1. It acknowledges the rise of payment-related ‘FinTech’ companies and aims to create a level playing field for all payment services providers while ensuring enhanced security and strong customer protection. In short, PSD2 enables bank customers, both consumers and businesses, to use third-party providers to manage their payments and finances. In using such third-party services, customer funds can still be safely held in a bank account. Banks are obliged to provide these third-party providers with access to their customers’ accounts through open APIs (application program interface). This will enable third-parties to build financial services on top of banks’ data and infrastructure.

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