In a move that will define the future of financial transactions within the European Union, the European Council and Parliament have reached a groundbreaking agreement on a new Payment Services Regulation, alongside the latest Payment Services Directive 3 (PSD3). These changes are a response to the evolving digital payment trends while addressing growing concerns about fraud and transparency. This regulatory upgrade seeks to reshape how businesses and individuals navigate payment processes, ensuring a more secure, streamlined, and fair ecosystem for all.
What Does The Agreement Bring to the Table?
Let’s face it , while businesses and consumers have embraced digital payment systems, the current framework under PSD2 has its limitations. As an entrepreneur constantly exploring new digital tools, I’ve realized firsthand that outdated regulations can be a frustrating hurdle. Enter PSD3, a robust revision that looks to tackle the issues left unresolved in the previous framework. Here’s what this new agreement offers:
1. Clear Focus on Fraud Detection and Prevention
Fraud is a concern that keeps many entrepreneurs awake at night. Under this regulation, payment providers must verify that the account numbers and account holder names match. This change comes as fraud tactics, such as "spoofing," have exposed vulnerabilities in the system. Providers who fail to implement robust anti-fraud measures will now face direct accountability for financial losses. If you’ve been frustrated by fraud risks associated with online payments, this provision could mean one less thing to lose sleep over.
2. Transparent Fees and Conversion Rates
Hidden fees can be a killer for small businesses. This regulation mandates clearer fee disclosures for merchants and customers alike. Whether you’re withdrawing cash from an ATM or processing card payments as a shop owner, transparency will let you and your customers know exactly where your money is going.
3. More Consumer Protections at the Core
The agreement pushes for retail stores to allow cash withdrawals without requiring purchases, a win for financial inclusivity. For rural entrepreneurs or businesses catering to underserved areas, this ensures equal opportunities for offering cash services. Pose your store as a community hub, and you might see more footfall simply by enabling this functionality.
4. New Powers for Consumers
Imagine setting your own spending limits on credit cards with ease, or having instant access to tools to block and manage payments in real-time if fraud is suspected. PSD3 empowers bank customers and entrepreneurs to make quicker, easily controllable financial decisions.
5. Licensed Advertising Only
Another important upgrade is reining in unscrupulous actors advertising financial products online. Only regulated institutions can now advertise financial services, serving as an added layer of consumer protection and leveling the playing field. For businesses operating authentically, this cuts out competition from questionable operators.
How to Adapt and Thrive in This Evolving Payment Era
As a serial entrepreneur working with tech startups, I know how important it is to stay ahead of regulatory changes. Here are a few ways to position your business for success in this updated payment services environment:
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Update Your Payment Infrastructure: Make sure your payment systems comply with IBAN verification and transaction limit requirements. Not being prepared could hurt your reputation and bottom line.
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Review Your Fee Transparency: If you’re running an e-commerce store, clearly disclose payment-related fees during checkout. Consumers love transparency, and ignoring this can cost you.
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Engage with Your PSP: Regularly discuss how your payment service provider (PSP) is handling fraud prevention and compliance. Opt for providers that embrace customer-centric approaches with robust features like transaction blocking and dashboards for data management.
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Educate Your Team: Ensure your staff is informed about new regulations, especially if they interact directly with customers regarding payment methods or fee disclosures.
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Leverage the Cash Accessibility Option: If your business operates in areas where cash is still king, welcoming in-store cash withdrawals could be a smart move. It increases foot traffic and builds trust within the local community.
Watch Out for These Mistakes
Let’s discuss missteps that might hold businesses back in the face of these new rules:
- Delaying Compliance: Waiting until these regulations come into force in 2025 or 2026 could set your business up for penalties and reputational damage. Plan ahead, and implement changes early.
- Choosing the Wrong Partners: Aligning with unregulated payment service providers could be catastrophic, given the liability under PSD3. Partner with trusted, regulated services to safeguard your operations.
- Overlooking Cash Accessibility: Dismissing the importance of cash for certain demographics may result in losing a key customer base. Don’t misjudge your audience’s preferences.
Insights from the Journey
As someone who's guided startups through the ups and downs of digital transformation, I see this regulation as a double-edged sword. On one side, it seeks to empower users while creating a safer financial environment. On the other, the requirements could feel burdensome for businesses, especially those unfamiliar with compliance practices. Still, being proactive and integrating these changes into your operations will put you at a distinct advantage over competitors that resist adaptation.
E-commerce businesses, fintech startups, and even small retail shops have a wealth of opportunities to leverage these changes. Recognize the shift not just as a regulatory demand but as an opportunity for competitive differentiation. You’d be surprised at how much of a loyalty boost even basic transparency can yield.
For more detailed insights into individual aspects of the new regulations, you can visit Grant Thornton's guide to modernizing payment services or explore a technical overview from Linklaters.
As entrepreneurs, we need to remember that businesses don’t operate in isolation from their regulatory environment. The new Payment Services Regulation doesn’t just prepare the EU for the coming surge of digital financial innovation, it sets a precedent for a more transparent future. My advice? Start acting now. Your market advantage might just lie in doing the hard work before it’s mandated.
FAQ
1. What is the new Payment Services Regulation?
The new Payment Services Regulation is a framework agreed upon by the European Council and Parliament to modernize payment systems, prevent fraud, and enhance transparency for consumers and businesses. Read more about Payment Services Regulation on Taylor Wessing
2. What is PSD3 and how is it different from PSD2?
PSD3 is the updated Payment Services Directive aimed at addressing the limitations of PSD2 by introducing more rigorous anti-fraud measures, fee transparency, and consumer protections. Learn about the PSD3 updates from Latinia
3. How does the regulation tackle payment fraud?
It requires payment service providers to verify account numbers and names match during transactions and to implement robust fraud prevention mechanisms, holding them accountable for losses due to fraud if these measures fail. Explore the anti-fraud measures in PSD3 on Linklaters
4. What changes are being made for fee transparency?
The regulation mandates clearer disclosure of fees for ATM cash withdrawals and card payments to ensure that merchants and customers understand all costs associated with transactions. Read more about fee transparency on Finextra
5. How will this regulation affect access to cash?
Retailers will be allowed to provide cash withdrawals of up to €150 without requiring a purchase, enhancing financial inclusivity, especially in rural areas. Find out how PSD3 improves cash access on Linklaters
6. What are the new consumer protections included?
PSD3 empowers consumers with real-time tools to set transaction limits, block payments, and manage data access via dashboards, increasing control over financial decisions. Discover consumer protections in PSD3 on ACI Worldwide
7. How does PSD3 regulate online financial service advertisements?
Only regulated and authorized financial entities can advertise their services on major platforms to protect consumers from unregulated operators and fraudulent advertisers. Learn more about advertising regulations in PSD3 on Finextra
8. What can businesses do to adapt to PSD3?
Businesses should ensure payment systems comply with requirements like IBAN verification, fee transparency, and fraud prevention while educating staff on new regulations. Review adaptation strategies on Grant Thornton
9. When will the new regulations come into force?
The PSD3 and Payment Services Regulation are expected to be implemented between late 2025 and early 2026. Check out the timeline for implementation on Latinia
10. What are the mistakes businesses should avoid under PSD3?
Key pitfalls include delaying compliance, partnering with unregulated service providers, and dismissing cash accessibility as a strategic opportunity. Examine mistakes to avoid on Linklaters
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.
