European Council and Parliament reach agreement on new payment services regulation

Editorial

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The provisional political agreement creates a new payment services regulation that amends PSD2 and aims to put in place a comprehensive anti-fraud framework.

This framework is designed to catch up with new forms of payment scams, such as so-called ‘spoofing fraud’, where fraudsters impersonate a customer’s payment service provider (PSP) to gain trust and trick the user into carrying out fraudulent financial actions.

In addition, the plan would require PSPs to share fraud-related information between themselves. Payment account IBAN numbers will have to be checked against a corresponding bank account name before any transfer can take place, as is already the case for instant payment transfers taking place in euro. And, PSPs will be held liable should they not fulfil their obligations in terms of using some of the preventive tools.

Lastly, major online platforms and search engines may advertise financial services to consumers in a given member state only if the company providing those services is duly regulated and authorised within that member state.

The new regulation also takes aim at fee transparency. ATM providers will be legally obliged to show the user all fees due and exchange rates applied before a transaction can take place. Similarly, companies providing card payment facilities to merchants will have to make clear the fees they charge for their services.

Meanwhile, lawmakers want to improve access to cash, especially for people in rural areas who may not have easy access to an ATM. Under the new framework, retailers will be able to offer cash withdrawals without a purchase being made. To prevent abuse, such withdrawals will require chip and PIN technology and will be subject to a maximum withdrawal limit of €150.

Morten Bødskov, Danish Minister for business, industry and financial affairs, says: “Today’s agreement marks a major step in the fight against payment fraud in the EU. And by enhancing consumer protection, improving transparency, and fostering innovation, we are paving the way for a more secure, efficient, and consumer-friendly payment landscape for all Europeans.”

However, the Computer & Communications Industry Association (CCIA Europe) has hit out at the fraud liability plans.

CCIA Europe policy manager Leonardo Veneziani says: “After the Council caved to the European Parliament’s dangerous and misguided approach to fraud liability, CCIA Europe is alarmed that the provisional deal on the Payment Services Regulation struck by Council and Parliament today sides with Big Banks and Telcos. This only makes it easier for fraudsters to continue exploiting consumers.

“This convoluted framework undermines simplification efforts and risks conflicting with the Digital Services Act’s ban on general monitoring – ignoring multiple studies warning it will be counterproductive. Instead of protecting consumers, today’s outcome sets a dangerous precedent and shifts responsibility away from those best placed to prevent fraud.”