PSD2 (Payment Services Directive 2)
PSD2 — the Second Payment Services Directive (Directive 2015/2366) — is the EU regulation that created the legal foundation for open banking in Europe. Adopted in 2015 and fully effective since September 2019, it requires banks to provide authorised third-party providers with access to customer payment accounts through secure APIs.
The directive introduced two categories of regulated providers that matter for real estate: Payment Initiation Service Providers (PISPs), which can initiate a payment from a customer's bank account on their behalf, and Account Information Service Providers (AISPs), which can access account data (with customer consent) for services like financial aggregation and creditworthiness assessment.
PSD2 also mandated Strong Customer Authentication (SCA) — a requirement that most electronic payments must be verified using at least two independent factors (something the customer knows, has, or is). For property companies, SCA means tenants authorise each payment through their banking app, which reduces fraud but adds a step to the payment flow.
For real estate companies, PSD2's most significant impact is enabling A2A (account-to-account) payment initiation — an alternative to cards and direct debits that settles faster, costs less, and gives the property company real-time confirmation. UrbanPay's regulated partners hold the PSD2 authorisations needed to initiate payments on behalf of property companies, so the property company itself does not need to become a regulated entity.
PSD2 is now being succeeded by PSD2, which strengthens these provisions and adds protections like mandatory Verification of Payee.