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Article 21 Nov 2023

European Payment Regulations and Changes You Need to Know for 2024 

Payment regulations for Europe explained and dissected.

Change is constant in European payments, and listed in this article are the most significant payment regulations to impact the sector during 2023. An industry currently in the midst of a transformation – in which existing laws are helping reshape the long-term financial landscape. 

And with all this disruption, it is, therefore, essential that businesses and entrepreneurs in Europe know the significant implications of these changes and master them. 

This article provides an in-depth analysis of the key regulatory developments affecting the payment services industry from 2023, their significance, and the potential benefits they will offer in 2024 and beyond. We will cover:

  • The necessity of payment regulations 
  • The benefits of compliance with payment regulations
  • Understanding EU legal designations
  • Key payment regulations and updates in Europe
  • In summary: how to navigate the 2023 changes

The necessity of payment regulations 

The European payment sector is sometimes mockingly perceived as somewhat conservative, regulatory, and restrictive. An insult hurled at it when compared to regions like the USA or Asia, which have much more lenient regulations. 

However, the existing legal framework in the EU is not in place to stifle innovation but rather to provide a secure framework for businesses and to protect consumer data.

Brite Payments, founder and CEO,  Lena Hackelöer, highlights the importance of EU regulations in the financial industry, emphasising that compliance is crucial for maintaining consumer and entrepreneur data security. Indeed, this is especially important in the sphere of open banking and instant account-to-account payments.

 “Financial security is always the foundation for a positive customer experience and is critical to our product development. Ensuring that payment processes are secure is paramount in the payment industry.”

Lena Hackelöer, Brite Payments, founder and CEO

The benefits of compliance with payment regulations

Indeed, compliance with existing regulations ensures security and boosts the credibility of businesses within the industry. Companies that consistently adhere to payment regulations and transparently communicate their compliance gain a competitive advantage, especially in a complex international market.

Inadequate regulation implementation can also have severe consequences. For example, as seen in the various retail banking scandals across Europe in the late 2010s and early 2020s, such as with Danske Bank, Deutsche Bank and Wirecard, where anti-money laundering laws were not implemented as well as they should have been. The result was multiple penalties and suspensions for companies and banks that failed to meet the regulatory standards.

The European Commission (EC) also underscores the importance of a common regulatory framework for payment services within the EU. The aim is to create a unified payment area that ensures consumer security in cross-border transactions and promotes competition among payment service providers.

One way of staying compliant and ahead of the competition is simply (and diligently) learning EU legalise.

Understanding EU legal designations

EU legal decisions come in various forms, each with different implications. It is, therefore, essential to understand the different designations:

Regulation: A regulation is a binding legal act that all EU countries must fully implement.

Directive: A directive sets a goal to be achieved by all EU countries, but each nation must adopt its own legal provisions to accomplish this goal.

Resolution: A resolution is directed at an individual EU country or a company and must be applied directly by that entity.

Recommendation: A recommendation may contain opinions or proposals but is not binding.

Statement: A statement is considered an unbinding expression on a specific matter and does not entail legal obligations.

Key payment regulations and updates in Europe

Now, let’s delve into the most relevant new payment service regulations and updates hitting the European payment sector during 2023:

MiCA (Markets in Crypto-Assets)

The MiCA Regulation is a significant milestone, providing the first harmonised EU regulatory framework for crypto assets. It specifies obligations for crypto asset providers and traders on crypto trading platforms. 

Key provisions include authorisation requirements, compliance with specific legal consequences for different categories of crypto securities, and adherence to regulations like the Transfer of Funds Regulation and the “Travel Rule.”

MiCA aims to increase investor protection, ensure legal certainty, and create a publicly viewable registry for crypto assets. Expect it to come into effect in January 2025. Stablecoin issuers and other crypto service providers will have 12 to 18 months to implement the regulations.

DORA (Digital Operational Resilience Act)

DORA aims to harmonise and unify existing cybersecurity and information and communication technology (ICT) regulations in the European financial market. It introduces a comprehensive ICT risk management system, early warning indicators, threat intelligence, threat-led penetration tests, and emergency and recovery plans. 

DORA has been in effect since 16 January 2023, and companies have 24 months to implement it fully. This regulation enhances the security of digital operations in the financial industry.

Payment Services Directive Revision 3 (PSD3) and Payment Services Regulation (PSR)

PSD3 modernises the previous Payment Services Directive (PSD2) and introduces various changes to enhance consumer protection, secure payment services, and foster innovation. It applies to most businesses in the payment sector, including digital wallet providers and online merchants. 

Key provisions include refining Strong Customer Authentication, introducing payment recipient confirmation services, and enhancing transaction monitoring. The implementation of PSD3 will likely occur towards the end of 2026. If you would like to find out more about information about PSD3, then download Brite’s PSD3 Explainer guide.

CESOP (Central Electronic System of Payment Information)

CESOP is principally designed to combat electronic value-added tax (VAT) fraud in cross-border payments in European e-commerce. It requires banks and payment service providers to provide payment data to financial authorities. It then centralises this information for fraud prevention purposes. The new obligations come into force on January 1, 2024.

EU Accessibility Directive

The European Accessibility Act (EAA) seeks to ensure the accessibility of products and services across various aspects of societal life. This directive aims to make digital offerings usable by all people, oblige private sector companies to ensure accessibility and improve usability for individuals with disabilities and temporary impairments. As part of this different countries must pass this into their own local laws, for example in Germany, the Barrierefreiheitsstärkungsgesetz (BFSG), a part of the EAA, passed in May 2021 and requires all products and services placed on the market after 28 June 2025 to be barrier-free.

EU Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT) Package

The EU AML/CFT Package aims to strengthen regulations for combating money laundering and terrorist financing. It includes the “Single Rulebook Regulation,” the 6th Anti-Money Laundering Directive (which came into force in 2023), the regulation establishing the European Anti-Money Laundering Authority (AMLA), and amendments to the EU Regulation on transferring funds and certain crypto-assets. These measures aim to create a robust enforcement system, prevent money laundering, and enhance the detection of money laundering and terrorist financing within the EU.

In summary, navigating the payment regulation changes  

The European payment sector is experiencing rapid regulatory changes and updates in 2023. Businesses must stay informed about these developments and ensure compliance with the new payment regulations to secure their operations and remain competitive.

The regulations documented in this article are designed to enhance security, protect consumers, and foster innovation in the financial industry. By understanding and adhering to these new legal provisions, businesses can navigate the changing tides of the European payment sector and thrive in this evolving landscape.

Finally, for a payment service provider such as Brite Payments, it is essential to remain a reliable partner in the payment industry by helping businesses adapt to new payment regulations seamlessly. Get in touch to discover how Brite can help your business with compliance, innovation, and diligence when making Instant Payments across Europe in 2024 and beyond.

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