PSD2 is a significant revision of the existing regulation in payment services throughout the European Union. It aims to increase competition, bring into scope new types of payment services, enhance customer protection and security and extend the reach of the directive.
PSD2 breaks down banks’ monopoly on their users’ data. It will allow for merchants (businesses like Amazon) to retrieve consumer account data from banks with the permission of the consumer. This means that when a consumer purchases something, the payment can be made straight to the merchant without having to be redirected to another service, eg. PayPal or Visa. For consumers who hold more than one bank account, the changes will also allow businesses, Account Information Service Providers, to display all their account information in one place, in the same way as Mint is doing in the US. PSD2 will also require stronger identity checks when paying online. Like many elements of the directive, the specifics are still being debated, but it is likely to involve more checks than we currently have in place, particularly for high-value transactions.