Regulation
PSD2
The EU's Payment Services Directive 2, which mandates SCA, opens banking APIs, and reshapes payment liability.
PSD2 came into force in 2018 and mandates strong customer authentication (SCA) for in-scope electronic payments. It also opened bank APIs to licensed third parties (AISPs and PISPs), enabling open banking and pay-by-bank flows. PSD3, currently progressing through EU legislation, will tighten fraud liability and consumer protections further.
Related terms
PSD2 requirement that customer-initiated electronic payments in the EEA and UK be authenticated with two of: knowledge, possession, inherence.
A card-network authentication protocol that shifts fraud liability from the merchant to the issuer when a cardholder is verified.
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