From the Second Payment Services Directive to the Payment Services Regulation and the Third Payment Services Directive: A Critical Assessment of the Implications for European Fintechs

This article critically examines the evolution of the European Union’s regulatory landscape for payment services, from the original Payment Services Directive (PSD) to the Second Payment Services Directive (PSD2), and now towards the forthcoming Third Payment Services Directive (PSD3) and the Payment Services Regulation (PSR). It explores how these legislative frameworks have significantly influenced the financial technology (Fintech) sector by enabling innovation and fostering competition, particularly through the integration of non-bank entities into the payments ecosystem. The article highlights the progressive nature of the EU’s approach, with PSD2 serving as a major catalyst for Fintech development and the anticipated PSD3/PSR expected to further refine regulatory boundaries and promote a harmonized digital payments market across Europe. It also highlights existing and potential future limitations of the regulatory approach in terms of supporting the growth of the payments Fintech ecosystem in Europe.