knowledge 4 December 2025 |

Payment Services Directive 3 – Progress on Updating Regulatory Regime

On 27 November 2025, the European Council and Parliament announced that they have arrived at a provisional political agreement on the final text of the proposals package to create a new PSR and PSD3.

The PSR aims to harmonise payment services and strengthen fraud prevention across the European Union. It applies to payment services provided by banks, post-office giro and payment institutions, as well as technical service providers supporting payment services, and in some cases electronic communications providers and online platforms.

PSD3 seeks to ensure fair competition among payment service providers, by addressing authorisation and supervisory powers, and to improve access to cash.

Measures to Tackle Payments Fraud

Payments fraud has become a big problem in recent years, particularly with digital financial services becoming increasingly common. The proposals aim to put in place a comprehensive anti-fraud framework that will help tackle increasingly common forms of payment scams. Amongst other matters, the new regulatory regime introduces the following requirements to help tackle payments fraud:

• payment service providers will be required to share fraud-related information between themselves;
• payment account IBAN numbers will have to be checked against a corresponding bank account name before any transfer can take place, as is already the case for instant payment transfers taking place in euro;
• payment service providers need to ensure strong customer authentication and conduct a risk assessment;
• if a payment service provider fails to implement appropriate fraud prevention mechanisms, it will be liable for covering customers’ losses;
• online platforms will be liable to payment service providers who have reimbursed defrauded customers if they are informed of fraudulent content on their platform and fail to remove it;
• major online platforms and search engines may advertise financial services to consumers only if the company providing those services is duly regulated and authorised; and
• customers must have access to human customer support (not only chatbots).

New Liabilities for Online Platforms and Search Engines

A striking feature of the new package is that, for the first time, liability can be imposed on online platforms and search engines involved in the dissemination of fraudulent financial content. Where a platform is informed of fraud-related content and fails to remove it, it can be required to reimburse payment service providers that have already refunded victims. This complements the Digital Services Act by adding a sector-specific liability backstop for payments-related scams. In parallel, very large online platforms and search engines must verify that advertisers of financial services are duly authorised or exempt in the relevant jurisdiction, or are advertising on behalf of an authorised firm, before carrying such advertisements. Taken together, these duties are intended to reduce the prevalence of fraudulent promotions and ensure that intermediaries that profit from distribution bear proportionate accountability when notified risks are ignored.

Increased Transparency

The new regulatory regime aims to boost transparency and improve access to cash. Amongst other matters, the following requirements will be imposed:

• transparency will need to be improved for ATM transactions. This will require providers to show the user all fees due and exchange rates applied before a transaction can take place;
• companies providing card payment facilities to merchants will have to make clear the fees they charge for their services;
• retailers will be able to offer cash withdrawals without a purchase being made (although such withdrawals will require chip and PIN technology and will be subject to a maximum withdrawal limit of €150); and
• to help customers identify transactions on their account statements, merchants must ensure that their normal trading name matches the name that appears on customers’ bank statements.

Technological Innovation

The regulatory regime aims to help the EU’s payment services landscape to adapt to new and innovative ways of making payments. Innovative service and information providers will be able to offer customers more useful and more modern payment services through improved access to bank account information.

Simplified Authorisation

The new regulatory regime aims to simplify the authorisation procedure for payment institutions. Authorisation should be subject to strong prudential and capital requirements, accurate own-funds calculations, reliable budget forecasts, and harmonised timelines, with initial capital scaled to the provider’s risk level and to the payment services provided. For details on the current authorisation process for payments institutions in Ireland, please see our briefing here. For details on the current authorisation process for electronic money institutions in Ireland, please see our briefing here.

Next Steps

The Council and the European Parliament will continue working on the technical elements of the package before final adoption by the co-legislators. The final text will likely be published in the first half of 2026 with the new regulatory regime entering into force after a transitional period (which is likely to be 18 months).

How McCann FitzGerald LLP Can Help:

McCann FitzGerald LLP is a premier law firm in Ireland with deep expertise in relation to payment services. We can provide a full range of legal and compliance support services in connection with PSD3/PSR. Please contact us to find out more.