PSD2 (Payment Services Directive 2) is a European Union regulation that governs payment services and payment service providers across the European Economic Area. Implemented in 2018, PSD2 aims to increase competition and innovation in the payments industry, enhance consumer protection, and improve payment security. The directive introduced key requirements including Strong Customer Authentication for electronic payments, open banking APIs that allow third-party providers to access customer account information with consent, and increased liability protections for consumers. PSD2 fundamentally transformed the European payments landscape by mandating more secure authentication methods and enabling new players to enter the market with innovative payment services.
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