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PSD3: What UK Businesses Actually Need to Know (and Ignore)

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PSD3 is essentially an evolution, not a revolution. PSD2 changed the game. PSD3 sharpens the edges. If your business accepts payments online or in-store, you’ve probably heard about the Third Payment Services Directive (PSD3) coming down the track. Set to be adopted across the EU in 2025, it’s the latest upgrade to the continent’s payment rules, building on PSD2’s foundations of stronger security and open banking.

But post-Brexit, does PSD3 even apply in the UK?

Not directly. But that doesn’t mean UK businesses can afford to ignore it.

Here’s a breakdown of what PSD3 is really about, how it differs from PSD2, what matters for your business, and what you can safely put aside… for now.

PSD3 in a nutshell

The European Commission introduced PSD3 in 2023 to address gaps in PSD2: inconsistent fraud protections, patchy open banking APIs, and limited consumer control over data.

Its key goals:

Tougher fraud prevention: New rules encourage data sharing between payment providers to detect fraud faster. Strong Customer Authentication (SCA) is getting smarter with fewer unnecessary steps and better safeguards for consumers tricked by scams.
Stronger consumer rights: Banks must offer users a “permission dashboard” to see (and revoke) which apps have access to their account. Expect clearer fee disclosures and easier-to-understand statements.
Open banking that actually works: PSD3 makes it mandatory for banks to provide standardised APIs with no fallback excuses. Non-bank providers can access key EU payment systems, unlocking innovation and competition.
Better inclusion: Even as digital payments grow, cash access must remain available and services must cater to users who can’t rely on smartphones or apps.
Simplified regulation: A new companion rulebook, the Payment Services Regulation (PSR), aims to standardise enforcement and bring consistency across the EU.

What this means in practice

While PSD2 introduced secure logins and open banking, PSD3 fixes the friction. Here’s what’s changing for businesses (and your payment partners):

Payments will feel smoother and safer: SCA rules will be less intrusive for low-risk or recurring payments, but tougher where fraud risk is higher. Expect stronger security in the background with fewer customer drop-offs at checkout.
Open banking will get more reliable: With better APIs, bank-to-bank payments will become faster and more dependable. That’s good news if you’re looking to cut card fees and speed up settlement.
Customers will trust digital payments more: Clearer information and control over data permissions can boost adoption of alternative payment methods, giving you more ways to get paid.
More competition means more choice: As non-bank providers gain equal access to payment systems, businesses can expect fresh options and potentially better pricing.

Does this impact UK businesses?

Here’s the reality – PSD3 is an EU directive. Since Brexit, the UK isn’t bound to implement it. But the themes it tackles are global, and the UK is moving in a similar direction.

HM Treasury is currently reviewing the UK’s own Payment Services Regulations, with many of the same priorities: smarter SCA, stronger fraud protection, and better support for open banking. So while the specific rules may differ, the outcomes will be similar.

For UK-only businesses, this means there’s no urgent need to comply but staying informed is wise. If you operate across the EU or serve EU customers, you’ll likely need to be PSD3-ready by 2026–2027.

What to Focus On (and Ignore)

✅ Focus on:

Choosing payment partners who are preparing for these changes, they’ll handle the heavy compliance work.
Exploring account-to-account payments to reduce costs (Atoa helps UK merchants save up to 50% on fees using Pay by Bank).
Using the next 12–24 months to review checkout flows and fraud prevention practices.

🚫 Ignore (for now):

Regulatory jargon, unless you’re in compliance, the details of “PSR” or “FIDA” won’t affect daily operations.
Niche rules like ATM cash withdrawals or marketplace exemptions if they’re irrelevant to your business.

Takeaway

PSD3 will make payments more secure, more competitive, and more user-friendly. While the UK’s exact path may differ, the direction is clear and businesses can use this as an opportunity to modernise how they get paid. Now is the time to explore new, cost-effective ways to accept payments, like Pay by Bank.

So, it’s business as usual, but better.