Voice of the Industry

Regulations in the payments industry: innovation enablers or bureaucracy burdens?

Monday 17 May 2021 07:52 CET | Editor: Anda Kania | Voice of the industry

Marco Conte of Payment Universe explains the dual perception the current payments regulations - such as Open Banking, SCA, surcharging, and AML6 - have across the industry

Payments and innovation are words often placed next to each other. Over the last years, we have been experiencing many technological changes enabling the introduction of new payment methods and advanced concepts which allow payments to be performed fully seamlessly. 

At the same time, the European landscape has been full of new regulations aiming to increase competition, security and payment best practices in the European Union. For some businesses this has been a pure bureaucracy burden, for others, this has been an enabler of innovation and new solutions. 

In this article, we take a look at how regulations such as PSD2 and AMLD5-6 have impacted, or are expected to, the European payment ecosystem. 

Open Banking

This has been surely one of the biggest changes brought by PSD2 and an initial burden for many financial players, forced to open up their customer databases giving access to information to be accessed by AISPs (Account Information Service Providers) and PISPs (Payment Initiation Service Providers). On the other side, this has been a considerable innovation enabler for many fintechs and startups which over the last years have built new products and services leveraging open banking infrastructures, leading to massive innovation in the fintech & payments industry. From a Germany-based consumer point of view, it is very interesting to see how much traditional financial procedures are now based on open banking, for example, initiating a small payment to gather customer information for a KYC registration process or for a credit application request. 

Strong Customer Authentication

Over the last years, merchants, issuers and payment service providers had to adapt many of their processes to be ready to comply with the different SCA enforcement dates (initially 14th September 2019, moved to 31st December 2020 and for many other countries moved to different 2021 months). Many can agree that this has been mostly a burden for many businesses, with payment service providers forced to allocate business and technical development resources to upgrade their systems and connections to 3DS Servers, go through certification processes, create new products, update their APIs to accept transactions which would go through the new EMV 3DS protocol. The same can be said about issuers, which had to provide new compliant SCA customer authentication solutions, update their systems with new authentication and authorization business logics, enrol and communicate to cardholders the new authentication changes. Last but not least, we have seen how SCA has been a major impact as well for merchants due to development efforts and many business resources dedicated to this topic to understand the best strategies to minimize the potential cart abandonment caused by SCA and 3DS2. 


The Payment Services Directive 2 (PSD2) prohibits that merchants apply any charges for Single Euro Payments Area (SEPA) credit transfers, SEPA direct debits or cards for which the interchange fees are capped under Regulation 2015/751. This has brought questions to charges on payment methods that are not expressively regulated under PSD2 and some national regulators had to express themselves and take a clear position on this topic. To give an example, recently the German Federal Court ruled that German merchants are allowed to apply a surcharge on payments where PayPal and Sofort are being used but the amount of the surcharge should not exceed the ‘direct costs’ related to the specific payment instrument. 


As of the 3rd of December 2020, the European Union’s Sixth Anti-Money Laundering Directive (AMLD6) is now in effect for all member states and should be implemented by regulated entities within member states by the 3rd of June 2021. AMLD6 is considered to be the strictest AML-related measure imposed by the European Union with serious implications for both individuals and organisations. The regulation aims to empower financial institutions and authorities to do more to fight against money laundering and terrorism financing by expanding the scope of the currently existing legislation, clarifying certain regulatory details and introducing tougher criminal penalties across the European Union.

A key focus of the new regulation is to help close loopholes across national legislation, bringing more harmonization about the definition of money laundering across the EU. The new directive introduces a list of 22 predicate offences for money laundering and member states must criminalise them whether they are illegal in those jurisdictions or not. The extended regulatory landscape means that anyone who helps money launderers will themselves be committing the crime of money laundering. 

This means as well that financial organisations, such as payment service providers, must also respond to these changes with effective actions. This might include providing new trainings to their compliance staff and should definitely include a full review of their current KYC and KYB processes.

About Marco Conte

Marco has spent the last 8 years focusing on payment and risk management working with Payment providers, Acquirers, Merchants and Vendors, helping a long list of enterprise merchants and top-tier Tech businesses. Before launching Payment Universe, he has been employed at Western Union and Wirecard to implement products and manage payment and risk strategies. Over the last 3 years, he had a deep focus on key topics such as payment performance optimization and regulatory changes in Europe due to PSD2 Strong Customer Authentication. At Payment Universe, he collaborates with a team of seasoned payment consultants working with merchants, payment service providers, issuers and fintechs to bring new solutions and support for payment optimization and product innovation. 

About Payment Universe

Payment Universe is a team of seasoned payment consultants working with merchants, payment service providers, issuers and fintechs to bring new solutions and support for payment optimization and product innovation. Over the last year they have supported businesses such as merchants, payment service providers and vendors in key payment industry topics such as payment innovation and regulatory changes due to PSD2.

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Keywords: regulation, SCA, Open Banking, AMLD6, online payments
Categories: Payments & Commerce | Online Payments
Countries: Germany
This article is part of category

Payments & Commerce