Key Points From The Payment Services Directive 2 (PSD2)

I’m immersed in studying the Payment Services Directive 2 (PSD2) in Europe, which includes an API definition to help enable the interoperability they are looking to achieve as part of the regulation. I’m working to break down the directive into bit such chunks to help be digest, and understand exactly what it does. The PSD2 laws seeks to improve the existing EU rules for electronic payments (hence the 2), and takes into account emerging approaches to payment services, such as Internet and mobile payments, with APIs at the hear.

The directive sets out rules concerning:

  • strict security requirements for electronic payments and the protection of consumers’ financial data, guaranteeing safe authentication and reducing the risk of fraud
  • the transparency of conditions and information requirements for payment services
  • the rights and obligations of users and providers of payment services

Additionally, “the directive is complemented by Regulation (EU) 2015/751 which puts a cap on interchange fees charged between banks for card-based transactions. This is expected to drive down the costs for merchants in accepting consumer debit and credit cards.” Which can be one of the most frustrating aspects of banking today, where you have no expectations regarding the fees you can be charged around every turn, as you are just trying to make ends meet.

You will be seeing a lot more posts about PSD2 as I work to absorb the regulations, and the technical guidance set forth regarding banking APIs. I’m playing around with the OpenAPI definition for PSD2, and crafting a version of my API Transit subway map to represent the technical guidance present. I’m also working to understand the business, and political aspects of PSD2, which involves me breaking down the directive into this small, digestible stories, here on API Evangelist.