The EU is replacing PSD2 and the E-Money Directive with a new directive, PSD3, and a directly applicable Payment Services Regulation. Here is what the agreed texts change, when they are expected to apply and what businesses should ask their providers now.
By Marc Conway, founder of 7 Seas Consultants | Reviewed | 9 minute read
Who this guide is for: Founders, compliance and product teams at EU payment institutions and EMIs, and businesses that rely on them for accounts, payments or e-money, including UK groups with EU-licensed entities or EU clients.
The European Parliament and Council reached political agreement on the package in November 2025, and the Council published the final compromise texts in April 2026. Formal adoption and publication in the Official Journal follow. Most of the new rules are expected to apply after a transition of around 18 to 21 months from entry into force, which on current timing points to late 2027 at the earliest and more likely 2028. Technical standards and guidelines from the European Banking Authority will add detail. Always check the current status before relying on a date.
The package has two parts. PSD3 is a directive that each member state transposes into national law, covering authorisation and supervision. The Payment Services Regulation applies directly across the EU and covers conduct: transparency, rights and obligations, fraud prevention, open banking and strong customer authentication.
The separate E-Money Directive is repealed. E-money institutions become a category of payment institution under PSD3, and existing EMIs and payment institutions will need to be re-authorised within a transitional period. For most well-run firms this should be an exercise in evidence rather than reinvention, but it will take management time and regulators will use it to test governance, capital, safeguarding and wind-down planning.
Customers must be told about all charges before a payment is initiated, including currency conversion charges and any fixed fees for cash withdrawals at ATMs. Payment service providers must also show merchants the fees they charge. For businesses that compare providers, this should make like-for-like benchmarking easier.
Banks must give payment institutions access to payment accounts on a non-discriminatory basis, which should reduce the sudden account closures that have long troubled the sector. Open banking interfaces face more prescriptive performance requirements, and customers will get a dashboard to see and manage the data access permissions they have granted.
PSD3 and the PSR are EU law and do not apply in the UK, which has its own regime, including mandatory reimbursement for authorised push payment fraud and the FCA's strengthened safeguarding rules. UK groups with an EU-licensed entity, or UK businesses relying on an EU provider for euro accounts or e-money, will feel the changes through those relationships.
If you are choosing a provider in the meantime, these questions belong in your RFP and due diligence.
This guide is general information based on our experience and public sources, reviewed in October 2026. It is not legal, regulatory, tax or financial advice and does not constitute a legal opinion. Regulations and market practice change; you should obtain your own independent professional and legal counsel before acting on anything in it. 7 Seas Consultants Ltd holds no payment licence and is not authorised by the FCA or any other regulator.
Short answers to the questions we hear most.
Political agreement was reached in November 2025 and the final texts were published in April 2026. Most rules are expected to apply after a transition of around 18 to 21 months from entry into force, which on current timing points to late 2027 at the earliest and more likely 2028.
E-money institutions become a category of payment institution, and existing EMIs and payment institutions will need to be re-authorised within a transitional period.
No. PSD3 and the PSR are EU law. The UK has its own regime, but UK groups with EU-licensed entities or EU providers will be affected through those relationships.
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