The EU struck a landmark agreement on Wednesday to overhaul its payment services law — promising stronger protections against online fraud, greater transparency in fees, and better access to cash, especially in rural and remote areas.
Under the deal, new and existing payment service providers alike will face tougher rules aimed at safeguarding consumers across the bloc.
Negotiators from the European Parliament and the Council sealed the deal on the revised Payment Services Regulation (PSR) and the updated Third Payment Services Directive (PSD3), which replace and modernise rules previously under PSD2. The reforms will apply to banks, post-office giro institutions, payment institutions, and technical service providers — and extend in some cases to electronic communications companies and online platforms supporting payment services.
Tougher Defences Against Fraud and Data Abuse
A key pillar of the deal concerns fraud protection. Under the revised law, payment service providers (PSPs) will be held liable when they fail to implement adequate fraud-prevention mechanisms. That means if a fraudulent transaction goes through due to inadequate verification, the PSP — not the customer — must cover the loss.
To reduce the risk of scams such as identity fraud, spoofing, or “impersonation fraud,” the reforms require strict checks: payee names must match account identifiers (IBAN), and payments must be rejected when there are mismatches — with the payer duly informed. In addition, strong customer authentication and thorough risk assessments become mandatory.
If a fraudster manipulates a transaction or tricks a user into authorising a payment under false pretences, the transaction will be treated as “unauthorised,” forcing the PSP to reimburse the full amount. What’s more, if an online platform fails to remove fraudulent content after being notified, it may be held liable for losses — a provision many believe to be a significant extension of consumer protection in the digital payments age.
Transparency on Fees — No More Hidden Charges
The new regulations also aim to end the widespread frustration of poorly disclosed fees and hidden charges. Before a payment is made, customers will have to receive full information about all applicable charges — including currency conversion fees and cash-withdrawal fees at ATMs, regardless of which institution or operator runs them.
Observing agencies say this move could especially benefit travellers and cross-border shoppers, who often bear the cost of opaque currency-conversion fees or surcharges without being fully informed. For everyday users, it removes the unpleasant surprises that sometimes accompany card payments and online transactions.
Cash Access Remains a Priority — Even in Remote Areas
Despite the steady drift toward digital payments, the deal recognises that cash remains vital — especially in rural, remote or underserved regions of Europe. To that end, the legislation allows retailers to offer cash withdrawals without requiring a purchase, with reasonable limits (e.g. a maximum of €150, minimum ~€100). This step could protect citizens who rely on cash for daily transactions from being left without convenient cash access.
Many believe this provision will shore up the principle of “financial inclusion” — ensuring that people without access to smartphones, banking apps, or fast internet are not disenfranchised.
Levelling the Playing Field — Banks and FinTechs Alike
The reforms do not merely target banks; they seek to create a truly open, competitive market among all payment service providers — whether legacy banks, fintech newcomers, or non-bank payment institutions. Banks will no longer be allowed to discriminate against “open banking services”; authorised third-party providers will gain the right to access payment account data on equal terms, making it easier for innovative payment initiation or account-information services to thrive.
Meanwhile, mobile-device manufacturers and other tech providers will be required to allow front-end service providers fair, non-discriminatory access to data needed for payments — a further signal that the EU intends to keep pace with rapidly evolving digital finance technologies.
Regulatory procedures, too, will be streamlined. Payment institutions and crypto-asset service providers (where authorised) will benefit from simplified authorisation processes, albeit with adequate capital- and risk-control requirements. This is intended to encourage healthy competition while preserving financial stability.
Dispute Resolution and Customer Support — Human, Not Just AI
One often-overlooked but critical aspect of the reforms is insistence on real human customer support. Users must have access to actual customer-service representatives, not mere chat-bots — a response to frequent complaints that automated systems cannot handle complex or sensitive issues. Dispute-resolution mechanisms will be mandatory for all PSPs, facilitating quicker resolution in cases such as unauthorised payments or errors.
What Remains — and What Needs Vigilance
For consumers and businesses alike, the agreement represents a significant improvement in transparency, fairness and fraud protection. Yet, it is not without challenges. The new rules must still be formally adopted by both Parliament and the Council before they become law, and implementation will likely vary across EU member states.
Some critics — especially from industry — warn that stricter liability rules may lead banks and payment institutions to tighten controls, possibly raising costs or reducing flexibility. Others fear that smaller fintechs might struggle with the prudential and capital requirements under the new authorisation regime, losing the agility that previously gave them an edge over traditional banks.
There are also concerns that the burden of compliance could stifle innovation if regulators push too far too fast. Striking the right balance between protection and flexibility will be key.
A Shift for Europe — But Not a Panacea
Nonetheless, experts view the deal as a landmark moment for the EU’s digital economy, one that could restore trust in online payments at a time of rising fraud and financial instability. The reforms tackle not just bank fraud, but the complex interplay of online platforms, payment institutions and digital services that now define how we spend, send and manage money.
Given the increasing sophistication of payment fraud — including identity theft, scam transfers, and misuse of personal data — the new rules may prove indispensable for reassuring consumers and businesses alike. The European Banking Authority earlier this year flagged payment fraud, indebtedness and “de-risking” as among the greatest risks affecting EU consumers.
If properly implemented, the changes could strengthen the entire Single Market for payments — boosting confidence, promoting innovation, and delivering real protections to citizens across all member states.
What Comes Next
With a draft political agreement now in place, the next steps involve formal adoption by the European Parliament and Council. Once enacted, national regulators and payment service providers will have to integrate the new rules, upgrade their systems, and inform clients about the changes to fees, authentication, data access, and dispute procedures. Agenparl+1
For consumers, the reforms mean easier, cheaper and safer day-to-day payments — from online shopping and instant transfers to ATM withdrawals in remote villages. For regulators and businesses, they pose fresh compliance demands but also open opportunities for innovation and competition.
In short: the EU has laid a new foundation for its payments landscape. Whether this becomes a durable, trusted platform or another layer of regulation hinges on implementation, enforcement — and a bit of common sense.
Main Image: Fred MARVAUX © European Union 2025 – Source : EP Usage terms: Identification of origin mandatory
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