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What is PSD2


PSD2 is a follow-up EU legislation adopted in 2015 which builds on the existing directive to build a single market for safer and more innovative payment services. The directive reinforces the existing aim for an easier and more secure cross-border payments, with particular focus on stronger customer authentication. Since coming into effect in January 2018, the directive has put major focus on improvements in the following areas:

Secure Customer Authentication (SCA) criteria

PSD2 has made 2-ID verification process mandatory for most transactions to prevent frauds. Exceptions are made with corporate payments, transactions that are deemed “low risk” or with cases where the person has whitelisted the supplier or is making a recurring payment.

Enhanced Customer Rights

The directive is making great strides in improving customer rights as well. In particular, it states that customer complaints need to be dealt with within 15 days. Customers also gain better transparency around incident reporting in terms of frauds, complaints or downtime.

Open Banking

Traditional banks are required to make their data and APIs public, which means that independent third-party financial service providers can join the banking space with new, innovative solutions. One simple benefit from this is that, for instance, customers will be able to compare different products across banks and make an informed decision about what’s best for them. Other benefits can come from banks sharing transactional details on how people spend or lend money so that new and more relevant products can be brought to the market. This creates a new space where traditional banks and other payment service providers can collaborate to improve customer experience.

Payments Glossary

The world of payments is littered with jargon. The Prommt Payments Glossary can help you get to grips with it all. It provides easy definitions for all of the common terms and acronyms you’ll encounter when talking payments.

You can find definitions for terms like chargeback, issuer, acquirer, gateway and many, many more.

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Prommt Payments Glossary