David Song, European Developments Manager at UK Finance, sets out three key benefits for consumers that the second Payment Services Directive (PSD2) will bring.

UK Finance sees PSD2 as a truly transformative piece of legislation for the financial services industry and for its customers. With just five months to go until the implementation of PSD2, it's a good time to provide an update on the change that is coming in January next year.

PSD2 brings a host of advantages for customers? not least that charges for paying by debit or credit card will be banned entirely from January. Other potential benefits include:

• More and better services

PSD2 will help increase the number of financial providers and services which customers will be able to choose from. As new companies, such as FinTechs, spring up to make the most of the account and transaction data, customers will be more likely to find the financial product or service which best suits their needs.

• More control over your finances

PSD2 will lead to a major change in the accessibility of customer data to authorised third parties when the customer has given their explicit consent. We are only starting to anticipate the huge benefits this could have for customers. From the most sophisticated corporates to those financially excluded, new services will allow customers to take greater control of their finances.

• Better protection against fraud

The revised Directive builds on existing consumer protection rules to defend consumers against fraud through enhanced security requirements, including the use of strong customer authentication for electronic payments.

What is PSD2?  

Customers may not be familiar with it, but PSD2 is a major piece of EU legislation that will ensure that all payment service providers (PSPs) that operate in the single market are subject to supervision and the appropriate rules.

PSD2 is the result of a review of the original Payment Services Directive and requires PSPs to make a significant number of changes to existing operations. The revised Directive will come into force on 13 January 2018.

PSD2's main aim is to contribute to a more integrated and efficient European payments market. It will promote competition through a regulatory framework which encourages the emergence of new players and innovative mobile and internet payment services.

It's important that PSD2 is considered alongside all the other regulatory and strategic initiatives in play across the UK market. Many of the requirements and changes in the evolving landscape interrelate and the result needs to be an efficient, competitive and safe financial services market for customers and PSPs alike.

UK Finance will lead the critical work to ensure a coordinated approach to implement PSD2 requirements and secure the best outcomes for UK customers and businesses. This is being achieved by working closely with our members, the wider industry and key stakeholders - at domestic, European and international levels.