A critical analysis of the payment services directive 2 and its effect on consumer protection and data protection

Abstract

The innovative developments during the early 10s brought new actors to the payment market. The desire of the European Commission was to regulate such technology tools, whilst pinpointing key factors inducing such changes in the EU payment sector. Credit institutions, although, just acquiring a new level of trust, following the collapse of the Financial Services market in 2008, have had their dominance in the sector substantially reduced. The enactment of PSD2 allows the non-bank institutions to provide access to payment services, without depending on credit institutions. This has caused a disruption in the traditional market, expecting incumbents to think of new creative business models to help them remain competitive. In so doing, the payments landscape has completely changed. An analysis was made on the written word of the PSD2, which repealed the first attempt of the EU to regulate the payments market; a sector big enough to merit another financial services pillar, along with banking, insurance and investment. Although PSD1 was rescinded, certain provisions were left for the Member States’ interpretation during the transposition stage, despite the various discussions preceding the final text publication. This study attempts to assess the PSD2 in terms of the competition it has created through innovation, the consumer protection it truly wants to prioritise and the security measures in place to safeguard the most vulnerable.