This deep dive is the second in the line of our PSD3 and PSR series – review part 1: Wind-down planning under PSD3 and part 3: PSD3 fraud prevention.
For Irish firms regulated by the Central Bank of Ireland (CBI), these changes are likely to have strategic, operational and governance implications. Existing Payment Institutions (PIs) and Electronic Money Institutions (EMIs) will need to assess how the revised framework affects their regulatory status, business model and readiness for enhanced supervisory expectations.
Under the proposed regime, the current PSD2 framework will be split into two distinct components:
This structure is intended to create greater regulatory consistency across Member States by reducing the opportunity for regulatory divergence, while ensuring that supervisory authorities retain oversight of authorisation and prudential requirements.
One of the most significant changes under PSD3 is the amalgamation of the current PI and EMI authorisation regimes.
Electronic money issuance will become a regulated activity within a single Payment Institution licence, removing the distinction between Payment Institutions and Electronic Money Institutions that exists today.
For firms operating multiple regulated entities, this could create opportunities to simplify group structures and reduce administrative complexity. Organisations that currently maintain separate PI and EMI entities may be able to consolidate activities under a single regulated entity, potentially streamlining governance arrangements, reporting obligations and capital management.
For new entrants, the change also provides greater flexibility by removing the need to decide between licence types at the outset of their regulatory journey.
From a strategic perspective, firms should begin assessing:
PSD3 introduces a stronger emphasis on firms demonstrating that they continue to meet regulatory expectations. Existing firms should expect to undergo a transition process demonstrating compliance with the revised PSD3 framework and any applicable national implementation requirements.
Based on the PSD3 proposals and current supervisory priorities, firms should expect scrutiny in areas such as:
As a result, firms should consider undertaking a structured gap assessment against PSD3 and PSR requirements and developing a roadmap to address any identified deficiencies well in advance of implementation.
PSD3 is also expected to expand the scope of activities subject to regulatory scrutiny.
As payments continue to become more deeply integrated into digital platforms and technology-driven business models, regulators are seeking to ensure that the regulatory perimeter remains aligned to market developments.
The main update regarding the regulatory perimeter or the Payment services regulations is the tightening of the conditions under which entities can utilise the “commercial agent exemption”.
For some organisations, these changes may result in authorisation requirements where none previously existed. For others, they may require a reassessment of existing regulatory assumptions and the continued availability of exemptions.
Firms should therefore review current and planned activities to determine whether they remain outside the regulatory perimeter under PSD3.
As the PSD3 and PSR Frameworks continue to evolve and a final implementation date is set, firms will need to understand not only the regulatory requirements but also the practical implications for their operating model, governance arrangements and future growth plans.
Our prudential risk specialists work closely with payment and e-money institutions on licensing, regulatory change and engagement with the Central Bank of Ireland. We support clients in assessing the impact of PSD3, identifying gaps against emerging requirements and developing practical implementation roadmaps.
Our services include:
By taking an early and structured approach, firms can position themselves to meet regulatory expectations while supporting sustainable growth in an increasingly competitive payments landscape.
Looking for actionable insights and useful solutions? Advice you can put to work right now? Get the latest news from Frovis Mazars in Ireland in your inbox. We have insights into developments in audit, accounting, tax, financial advisory and consulting that affect your business. We can provide you with unique perspectives and thoughtful solutions so you can meet new challenges and seize opportunities.
The transition from PSD2 to PSD3 represents a significant evolution in the EU payments framework, with fraud prevention emerging as a key area of regulatory focus.
The introduction of the Payment Services Directive 3 (PSD3) will bring significant changes to the regulatory landscape for payment service providers across the European Union. While much of the discussion has focused on operational resilience, fraud prevention and consumer protection, the new framework also introduces important developments in how firms are authorised and supervised.
The introduction of the proposed Third Payment Services Directive (PSD3) will bring significant changes to the regulatory landscape for payment service providers including expanded fraud liabilities, stricter Open Banking rules and the merger of the Payment and E-Money institution license types.
Building the future of financial services with forward thinking solutions
Solutions to help banks thrive in a complex market
In an ever-changing regulatory landscape, we help our clients embrace reform, reshape their strategies, and mitigate regulatory risk.
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
For more information on the cookies we use, please refer to our Privacy Policy.
This website cannot function properly without these cookies.
Analytical cookies help us enhance our website by collecting information on its usage.
We use marketing cookies to increase the relevancy of our advertising campaigns.