The Payment Services Directive (PSD) 3 has played a crucial role in shaping the payment services landscape within the European Union (EU). As we look towards the future, it is essential to explore the potential impact of this payment regulation framework on the ever-evolving world of entrepreneurship and business in general.
The concept of open banking, facilitated by PSD3, encourages data sharing and competition in the financial industry. Entrepreneurs can access customer data (with consent) to create more personalized and value-added financial services, such as budgeting apps, investment platforms, and lending services.
Enhanced Customer Authentication (SCA)
One of the key provisions of PSD3 is the introduction of Strong Customer Authentication (SCA). SCA requires two or more of the following factors for verifying a customer’s identity, such as mobile device, password, or biometrics. This brings operational implications to entrepreneurs developing payment solutions, as they need to ensure their systems comply with SCA to prevent fraud and enhance security.
Entrepreneurs need to be well-versed with the regulatory requirements imposed by PSD3, including data security, privacy, and liability issues. Non-compliance can lead to legal consequences and reputational damage.