PSD3 Overview and Technical Standpoint

The European Union's financial landscape is undergoing transformation with the introduction of PSD3 (Third Payment Services Directive). Building upon PSD2, this new directive aims to enhance security, foster innovation, and create a more integrated, competitive payments market across Europe.

For banks, fintech companies, and payment service providers, understanding PSD3 is crucial—not just from a compliance perspective but also for staying ahead in a rapidly evolving industry. Let’s explore what PSD3 brings, how it differs from PSD2, and what steps organizations must take to adapt.

The Purpose and Objective of PSD3

PSD3 has been designed to address emerging challenges in digital payments, ensuring better consumer protection and fostering financial innovation. The key objectives include:

Combating Fraud – Introducing stricter authentication and security measures to prevent fraud in online transactions.

Enhancing Consumer Rights – Giving users better control over their financial data and access to more transparent information about payment services.

Leveling the Playing Field – Ensuring that non-bank Payment Service Providers (PSPs) receive fair access to banking infrastructure.

Advancing Open Banking – Standardizing API requirements and removing barriers to secure and seamless financial data sharing.

Ensuring Cash Availability – Mandating that merchants provide cash services without requiring a purchase.

Strengthening Regulatory Frameworks – Improving supervision of non-bank PSPs, making regulatory enforcement more consistent across EU countries.

These changes signal a significant evolution from PSD2, placing stronger emphasis on security, interoperability, and consumer empowerment.

Key Differences Between PSD3 and PSD2

While PSD2 laid the groundwork for open banking and improved security, PSD3 takes these principles further with more robust measures. One of the biggest shifts is the introduction of the Payment Services Regulation (PSR) alongside PSD3. PSD3 itself focuses on licensing and supervision, while PSR sets operational and security rules for payment providers. This ensures consistent application across EU member states.

PSD3 enhances security requirements beyond Strong Customer Authentication (SCA). Banks and PSPs must now implement IBAN and payee name checks to reduce fraud related to misdirected payments. The directive also mandates fraud data sharing among financial institutions, strengthening collective efforts to prevent cybercrime.

For open banking, PSD3 removes existing barriers, making APIs more standardized and efficient. Consumer dashboards will give users control over their data-sharing preferences.

Impact on Banks, Fintechs, and Payment Providers

The introduction of PSD3 affects all financial stakeholders, but the impact varies:

Banks & Traditional Financial Institutions – Must adapt to greater competition from fintechs and invest in upgrading security, authentication, and API infrastructure.

Non-Bank PSPs – Gain direct access to EU payment systems, which opens up new opportunities but also increases regulatory scrutiny.

Fintechs & Third-Party Providers (TPPs) – Will benefit from improved open banking access, but must meet stricter compliance requirements and ensure seamless data-sharing capabilities.

Overall, PSD3 aims to create a fairer, safer, and more innovative financial ecosystem—but compliance will require significant technical upgrades.

Challenges and Compliance Requirements

Adapting to PSD3 will require organizations to rethink their security, data management, and technology infrastructure. Some of the biggest challenges include:

Technical Overhauls – Companies must upgrade payment authentication and fraud detection systems to meet new security demands.

Stricter Compliance & Data Sharing – Financial institutions must implement real-time fraud monitoring and ensure API security meets regulatory expectations.

Increased Operational Costs – Compliance will require investment in cybersecurity, AI-driven fraud detection, and API management tools.

Despite these challenges, PSD3 also creates opportunities—especially for fintech companies that can leverage enhanced open banking frameworks to develop innovative payment solutions.

Technical Expertise for PSD3 Implementation

With the complexity of PSD3 compliance, having experienced software engineers and senior developers is critical.

API Development & Integration – APIs must be upgraded to meet new security and interoperability standards. Senior developers ensure these connect seamlessly with banking infrastructure.

Advanced Security & Fraud Prevention – AI-driven fraud detection tools and real-time monitoring solutions must be implemented. This requires deep expertise in machine learning and cybersecurity.

Regulatory Compliance & System Modernization – Legacy banking systems must be adapted to PSD3, ensuring they meet compliance mandates while maintaining operational efficiency.

Having a tech partner with FinTech or, better yet, an extensive banking expertise can significantly streamline PSD3 adoption and reduce compliance risks.

The Romanian Market Overview

Romania has seen rapid growth in digital payments, making PSD3 compliance especially relevant:

Digital Payment Adoption: The digital payments market in Romania is projected to reach a total transaction value of US$38.31 billion in 2025, with an expected annual growth rate (CAGR) of 24.05% between 2025 and 2029, resulting in a projected total amount of US$90.72 billion by 2029.  Statista

Payment Fraud Increase: According to the European Banking Authority's 2024 report, the total value of payment fraud in the European Economic Area (EEA) amounted to EUR 4.3 billion in 2022 and EUR 2.0 billion in the first half of 2023. While specific figures for Romania are not provided, the report indicates that card payment fraud rates slightly increased from 0.026% in H1 2022 to 0.031% in H1 2023.  European Banking Authority

For local banks and PSPs, PSD3 is both a regulatory requirement and an opportunity to improve security and expand services.

How to Upgrade to PSD3 Compliance

To ensure a smooth transition, financial institutions should take the following steps:

Conduct a Gap Analysis – Evaluate current compliance levels and identify the necessary upgrades to meet PSD3 requirements.

Strengthen Security Measures – Implement real-time fraud detection, AI-powered authentication, and IBAN verification.

Optimize API Infrastructure – Ensure seamless and secure data-sharing capabilities with standardized open banking APIs.

Enhance Consumer Protection Features – Develop user dashboards that allow customers to manage data-sharing consents efficiently.

Engage with Compliance Experts – Work with regulatory advisors and technology consultants to streamline the transition process.

OceanoBe Technology: Your Partner for PSD3 Compliance

PSD3 introduces exciting opportunities but also requires robust technical implementation. At OceanoBe Technology, our teams of senior developers and compliance experts can help you seamlessly transition to PSD3, ensuring:

✅ Secure API development and integration

✅ Advanced fraud detection and real-time monitoring

✅ Scalable open banking solutions

✅ Compliance with PSD3’s latest regulations

Ready to prepare for PSD3? Contact us for a detailed consultation and let’s map out how you can upgrade easily and efficiently.👉 Reach out today!