- EU PSPs will be responsible for customer losses if they do not have sufficient safeguards
- Sending PSPs should verify account details, receiving PSPs should freeze suspicious payments.
- The EU also calls for greater transparency in tariffs and access to cash
The European Parliament and the Council have reached an agreement on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3), with the aim of both protecting customers against 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 do not implement adequate fraud prevention measures.
This includes performing mandatory checks to ensure that the beneficiary name matches the account identifier; mismatches should lead to rejection of payments to avoid losses in the first instance.
The EU wants banks to boost fraud prevention
PSPs must also offer strong customer authentication, while spending limits and blocking tools must be available to users.
On the other hand, recipient PSPs must freeze suspicious transactions to prevent funds from being deposited into a dubious account.
PSPs must also fully reimburse losses caused by phishing fraud if the victim customer reports it to the police and informs their bank.
“Today’s agreement is a victory for Parliament by establishing a liability provision for the online platforms where the fraud began,” said the regulation’s rapporteur, René Repasi.
But it’s not just about fraud prevention, because the EU is also calling for greater transparency around fees. For example, all charges, including currency conversions and ATM fees, must be disclosed before payment is made.
The European Union also wants to improve access to cash in an increasingly digital world, offering retail stores permission to process cash withdrawals of between 100 and 150 euros without needing to make a purchase.
To further strengthen competition in this market, the EU is calling for barriers to open banking to be reduced, while clear user panels for managing data access permissions put more control in the hands of customers.
“This agreement is an important step towards a more open and resilient single payments market,” explained the directive’s rapporteur, Morten Løkkegaard, adding that “cash remains a genuine and convenient payment option.”
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