Behind every card payment, bank transfer, and phone tap is a set of EU rules, and they are about to change. A key European Parliament committee has backed the bloc’s biggest payments overhaul in nearly a decade, with a full plenary vote expected later this month. The reform brings mandatory fraud protections, better cash access, and clearer fees, but its rollout will be gradual.
The reform package, made up of the Third Payment Services Directive (PSD3) and the Payment Services Regulation (PSR), may sound technical. It is, however, one of the biggest overhauls of Europe’s payments framework in nearly a decade. The rules are designed to tighten fraud protections, improve competition between banks and fintech companies, and make cross-border payments run more smoothly across the bloc.
For Brussels, the issue goes beyond banking. Payments infrastructure now sits at the heart of Europe’s competitiveness agenda, alongside digital markets, industrial policy, and financial sovereignty. Payment systems are becoming more integrated into online commerce and mobile devices. The EU aims to build a rulebook better suited to the digital economy.
The package was first proposed by the Commission in June 2023. After years of negotiations, Parliament and the Council reached a final agreement earlier this year.
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“Consumers will benefit from new harmonised rules on the payment services regulation. Mandatory fraud preventive measures will be applied and lead to less payment fraud. Banks have to share more of the burden if they fail to do their part,” said René Repasi (S&D/DEU), rapporteur for the PSR.
A more unified rulebook
One of the biggest changes is structural. Under PSD2, the current framework, many rules had to be transposed individually into national law by member states. That often created fragmentation and different interpretations across the bloc.
The new package splits the framework into two parts. PSD3 will continue to deal mainly with licensing, supervision, and organisational rules for payment institutions. But many of the core operational rules, including customer rights, fraud prevention, and open banking, will now sit inside a directly applicable EU regulation, the PSR.
For companies operating across borders, that matters significantly. A regulation applies automatically in all member states, reducing the patchwork of national implementation that has long complicated the EU’s payments market. Patrice Navarro, partner at consulting firm Clifford Chance, calls it ‘the biggest reform to the European payments framework’.
Fraud protection at the centre
Consumer fraud prevention sits at the heart of the reform. Payment service providers (PSPs) will face stricter obligations to detect suspicious activity and verify transactions before payments go through.
Under the new rules, banks and payment providers will have to verify whether a payee’s name matches the account identifier entered by the customer. If there is a discrepancy, the provider will have to warn the customer or refuse the payment altogether. Providers that fail to implement proper fraud prevention systems could also become financially liable for customer losses.
The package also introduces stronger rules around impersonation fraud. This is when fraudsters pretend to be bank employees or payment providers to trick customers into authorising transfers. Customers who report the fraud to police and notify their provider promptly will generally receive a full reimbursement.
The reforms extend beyond banks themselves. Very large online platforms and search engines could also face liability if they fail to remove fraudulent financial advertisements or scam content after being notified about it. Advertisers promoting financial services will have to demonstrate that they are legally authorised to offer those services in the relevant country. Payment providers will also have to offer human customer support alongside automated systems such as chatbots, while member states are expected to invest more in public fraud awareness campaigns.
Improving competition
A key objective of the updated rules is boosting competition in the payments sector, particularly between traditional banks and open banking providers. Open banking allows third-party providers to access customer banking data, with permission. They can then offer services such as budgeting apps or alternative payment solutions. Fintech firms have long argued that banks sometimes make this access unnecessarily difficult.
The new rules should reduce those barriers. Banks will have to provide non-discriminatory access to payment account data for authorised providers. Users will also gain access to dashboards to monitor which companies can access their data.
Manufacturers of smartphones and electronic devices will also have to allow payment providers fair access to the technology needed to process payments. That could become increasingly important as mobile wallets and app-based payment systems continue to expand. Consultancy firm Paylume described the agreement as “a real turning point for payments”, arguing that it could help create a more level playing field between incumbents and newer digital providers.
The politics of cash access
Digital payments are growing fast. Yet negotiators pushed to preserve access to physical cash, especially in rural areas where bank branches and ATMs are disappearing. Under the agreement, shops will be able to offer cash withdrawals of between €100 and €150 without requiring customers to make a purchase.
A significant step toward a more open and resilient single market for payments.
— Morten Løkkegaard, rapporteur for PSD3, Renew/DNK
“We have secured better access to cash for citizens across Europe. Besides ATMs, people will now be able to withdraw money in a shop without being forced to make a purchase,” said Morten Løkkegaard (Renew/DNK), rapporteur for PSD3.
The package also increases transparency requirements around fees. Customers will have to receive clearer information on currency conversion charges and ATM withdrawal fees before making payments.
The Council is expected to formally adopt the new rules in the summer of 2026, after which they will phase in gradually. “A significant step toward a more open and resilient single market for payments,” said Mr Løkkegaard.
