PSD II: One Step Closer

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On October 8, 2015, the proposed PSD II was formally approved by the European Parliament (EP) by 578 votes to 29, with 52 abstentions. Following the EP’s approval, now the proposed PSD II has reached the final stage where it is up to the Council of the EU to formally adopt the text and have it published in the official EU languages.

As the PSD II nears publication, payment institutions and banks need to prepare themselves for certain obligations and requirements, especially those regarding security measures. In fact, the PSD II dedicates an entire chapter to such measures. PSD II security provisions include incident reporting obligations, strong authentication for payers and the management of operational and security risks. The mandatory use of such measures has also been referenced, in further detail, in the Guidelines on the security of internet payments, published by the European Banking Authority (EBA) on December 19, 2014.

However, according to a poll conducted by Finextra, it seems that European banks are struggling to come to grips with the new rules. Only 37% of European banks could confidently assert that their relevant departments had an appropriate understanding of the new rules and their implications.

While it may be premature to make any assumptions with regard to PSD II transposition and compliance, this is somewhat reminiscent of the reaction to the PSD way back in 2007. In order to alleviate the transposition process and to clarify the wording of certain ambiguous provisions of the PSD, the Commission had formed the Payment Services Directive Expert Group (PSD EG) and the Payment Services Directive Transposition Working Group (PSD TWG).

Will the Commission take a similar approach for the transposition of the PSD II? It’s quite likely that the EBA will come to the rescue, especially since the Commission has officially, through the PSD II, designated the EBA as the  body with the authority to issue guidelines and draft regulatory technical standards in relation to the PSD II.

Rachel Gauci, Legal Counsel for Credorax

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About Rachel Gauci

Rachel Gauci serves as Legal Counsel for Credorax, forming part of the legal team in the Malta office. She has over 3 years of experience in payment services legislation and anti-money laundering law.

Adv. Gauci holds a law degree from the University of Malta. Credorax, was the subject of the case study in her doctoral dissertation entitled, 'A Critical Analysis of the Payment Services Directive and its Practical Application'.

Prior to her role as Legal Counsel, Rachel was a Compliance Officer and an Anti-Money Laundering Legal Officer at Credorax.
Rachel provides legal advice on licensing requirements, contract negotiations, and any other ancillary issues concerning merchants, as well as legal advice concerning Credorax's core regulatory issues.
Connect with her: LinkedIn