// GLOSSARY -- PAYMENTS & FINTECH

What is PSD2?

1 min read Updated

PSD2 (Payment Services Directive 2) is European regulation mandating that banks provide API access to customer accounts for authorized third parties — enabling open banking and driving payment innovation across the EU.

WHY IT MATTERS

PSD2 is the regulatory foundation of European open banking. It requires banks to provide Account Information Services (AIS) and Payment Initiation Services (PIS) through secure APIs to licensed third-party providers.

PSD2's impact: fintech apps can access bank accounts directly (with user consent), initiate payments without card networks, and build financial products on top of bank data. This has spawned a generation of fintech companies.

For crypto, PSD2 matters because: fiat on-ramps can use PIS for cheaper bank-to-crypto transfers, account data helps with financial planning, and the regulatory framework is being extended (PSD3) to cover crypto assets.

FREQUENTLY ASKED QUESTIONS

What does PSD2 require?
Banks must provide APIs for: account information access and payment initiation. Both require user consent and the third party must be licensed as an AISP or PISP.
Does PSD2 apply to crypto?
Not directly — PSD2 covers traditional payment services. But PSD3 (upcoming revision) and MiCA regulation extend similar frameworks to crypto assets and services.
What is Strong Customer Authentication?
PSD2's requirement for two-factor authentication on electronic payments. Most online payments in Europe now require SCA (biometric, one-time code, etc.) in addition to card details.

FURTHER READING

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