On May 10, 2022, the European Commission published a public consultation (Main Consultation) to gather evidence for its review of the second EU Payment Services Directive (2015/2366) (PSD2), and to inform its continuing work on open finance. This is accompanied by targeted consultations on PSD2 (PSD2 Targeted Consultation) and open finance (Open Finance Targeted Consultation), which take the form of detailed questionnaires.

The consultations cover a wide range of topics. The Main Consultation asks more general questions on the use of payment services and the impact of PSD2, whereas the PSD2 Targeted Consultation and Open Finance Targeted Consultation ask detailed questions about technical matters and the extent of possible future regulation in payments and open finance.

What is the status of the consultations?

The consultations are early steps in the European Commission’s review of PSD2, which may ultimately result in revisions (most likely in the form of new legislation, e.g., PSD3). The consultations do not constitute a final position or formal proposal from the European Commission. However, the nature of the questions – particularly in the PSD2 Targeted Consultation – are likely an indication of the key areas of focus for the European Commission.

What are the key topics covered in the consultations?

PSD2 Targeted Consultation

The following topics raised in the PSD2 Targeted Consultation may be of particular interest to payment service providers (PSPs) and other firms with links to the payments sector.

  • Whether exemptions from PSD2 should be amended or removed and whether new exemptions should be added.
  • The possible extension of regulation to currently unregulated activities such as payment transactions using cryptoassets, Buy-Now-Pay-Later services, operating payment systems or payment schemes, digital wallet services (such as mobile apps used for payments), and payment processing services.
  • Potential adjustments to the safeguarding regime.
  • The extension of execution timing requirements to transactions where only one of the PSPs involved is located in the European Economic Area (“one-leg-in transactions”).
  • Regulating so-called “triangular” passporting – e.g., where an authorised PSP in Member State A makes use of the services of an agent in Member State B to provide payment services in Member State C.
  • Changes to strong customer authentication requirements.

Open Finance Targeted Consultation

The questions in this consultation focus on:

  • the use of existing open finance services – e.g., the use of payment initiation services and account information services to access payment accounts;
  • the types of financial services data that respondents would also like to be able to access via third-party providers – e.g., data relating to mortgage, savings, investment, insurance, and pensions services; and
  • customer and data protection considerations

What happens next?

Responses to the Main Consultation must be submitted by August 2, 2022. Responses to the PSD2 Targeted Consultation and Open Finance Targeted Consultation must be submitted by July 5, 2022.

We expect the consultations to be followed by more detail on the likely scope of future regulation in these areas, particularly after the European Banking Authority responds to the European Commission’s call for advice on the PSD2 review, which is due by June 30, 2022. This is likely to be followed by a substantive proposal for revisions to PSD2 in the form of a draft text of PSD3.

We are also likely to see further detail on the extension of open finance from payment accounts to a wider range of financial services. This may result in other EU legislative reforms.