In the four years since the second Payment Service Directive was implemented, the payments sector has been buffeted by the fintech phenomenon and the steady encroachment of Big Tech firms into financial services.

In response, the EC asked for market feedback as it set out to review the relevance of PSD2, in particular in light of market developments regarding new market players, services and technologies.

The EBA says that while some PSD2 objectives have started to materialise, there are still a host of issues and challenges to address, prompting the authority to offer up more than 200 proposed amendments.

Among these are the idea of merging PSD2 with the E-Money Directive that regulates electronic payment systems in the EU.

The EBA also wants clarification on the application of strong customer authentication and the transactions in scope as well as work to address enforcement shortcomings in relation to SCA for e-commerce card-based transactions.

Meanwhile, PSD2 should address new security risks such as social engineering fraud while also investigating how the move to smartphone-based authentication excludes some parts of society. The EBA also wants to move from Open Banking to Open Finance, expanding beyond payment account data to other types of financial data.

The EBA says that its proposed amendments "would contribute to the development of the single EU retail payments market and ensure a harmonised and consistent application of the legal requirements across the EU.

"In particular, the EBA’s proposals aim at enhancing competition, facilitating innovation, protecting consumers’ funds and data, fostering the development of user-friendly services, and preventing exclusion from access to payment services, as well as ensuring a harmonised and consistent application of the legal requirements across the EU."

Read the full response