Explainer: Understanding PSD3 and PSR – Key Updates, Timelines, and Action Points for Firms

In an article recently published by The Paypers, Dan Jones discussed the European Union’s significant overhaul of its framework for payments regulation.

As noted within the article: “On 22 April 2026, the proposed text of the Third Payment Services Directive (PSD3) and a new directly applicable Payment Services Regulation (PSR) were put before a meeting of national representatives for approval. Together, these measures will repeal and replace the existing regimes under PSD2 and the Electronic Money Directive, with a single supervisory framework focused on harmonisation, fraud prevention, and strengthening open banking.”

“For banks, payment institutions, and e-money institutions, PSD3 and the PSR will require material operational, legal, and compliance changes, particularly in fraud liability, API performance, and licensing structures.”

The article goes onto discuss key takeaways, including: structural reforms; the single licensing regime; the expansion of fraud liability; the enforcement of opening backing standards; expanding liability for enablers; and the implementation horizon.

“PSD3 and the PSR represent a fundamental redesign of EU payments regulation, with a clear emphasis on harmonisation, consumer protection, and operational resilience. Although implementation is expected by late 2027, the scale of change—particularly in fraud liability, licensing, and open banking—means firms should begin preparations now. At the same time, UK divergence will require firms to adopt jurisdiction-specific compliance strategies, increasing complexity for cross-border operations.”

Read the full article as published by The Paypers.