Do European banks have to facilitate Open Banking payments?
- PSD2 mandates banks reduce payment friction and fraud online
- Open Banking payments support both those goals
- Banks must support payment-initiation via licensed payment vendors
In September 2019, the EU enacted The Second European Payment Services Directive (PSD2), legislation designed to reduce friction and fraud related to online payments. Open Banking payments are part of that easier, and more secure, services supported by PSD2.
Previously, there was uncertainty in some markets regarding what types of vendors could provide payment initiation services, which resulted in some banks essentially blocking their customers from making Open Banking payments.
With PSD2, all banks are required to allow and support licensed payment vendors to initiate payments. The legislation also provides a legal framework for payment initiation from consumer bank accounts.