PSD2
PSD2, the second Payment Services Directive, is the EU law in force since January 2018 that created the legal basis for open banking. It obliges banks to give licensed third parties access to payment accounts and defines the rules under which those providers operate.
PSD2 created two new regulated services: payment initiation (PIS), where a provider starts a credit transfer from the payer's account, and account information (AIS), where a provider reads balances and transactions. Banks must make this access possible and may not treat third-party payments worse than their own channels. PSD2 also introduced strong customer authentication (SCA): payments require two independent factors, verified by the customer's own bank.
As a directive, PSD2 was transposed into national law by each member state, which produced uneven implementation and variable API quality between banks. That fragmentation is the main reason its successor — PSD3 with the directly applicable Payment Services Regulation (PSR) — moves most operational rules into a regulation. The provisional political agreement on that package was reached in November 2025.
Why it matters in real estate
PSD2 is why a property platform can collect rent directly from a tenant's bank account without holding banking credentials or a card number. Initiation happens under a licence, with SCA at the tenant's bank, and the transfer settles over SEPA. For a CFO this changes the dispute profile: an SCA-authenticated credit transfer has no chargeback mechanism, unlike cards, and no eight-week refund right, unlike SEPA direct debit.
It also changes cost. UrbanPay's Pay product uses PSD2 payment initiation from 0.25% per successful payment — a €1,000 rent payment at 0.25% costs €2.50 — with automatic reconciliation carrying contract, property, and tenant references.
Key facts
- In force across the EU since January 2018.
- Created payment initiation services (PIS) and account information services (AIS).
- Introduced strong customer authentication (SCA) for electronic payments.
- Will be replaced by PSD3/PSR: provisional agreement November 2025, application expected 2027–28.
Related terms
Compare PSD3 for what changes next, open banking for the ecosystem PSD2 enabled, and payment initiation for how PIS works in practice.
Frequently asked questions
What is the difference between PIS and AIS?
PIS starts a payment: a licensed provider initiates a credit transfer from the payer's account with their consent, without holding the funds. AIS reads data: balances and transaction history, used for checks such as tenant affordability. Both roles were created by PSD2 and both require the customer to authenticate with their own bank.
Does PSD2 apply in the UK?
The UK implemented PSD2 while an EU member and retains an equivalent open-banking regime supervised by the FCA. Licensed providers operate under UK rules that mirror the PIS, AIS, and SCA concepts. UrbanPay covers the UK among its 19 markets, with payments running via partner entities supervised by the FCA and BaFin.
Is PSD2 being replaced?
Yes, in stages. PSD3 and the Payment Services Regulation reached provisional political agreement in November 2025, with formal publication expected during 2026 and application expected in 2027–28. PSD2 remains the law in force until then, so current open-banking payments and licences continue to operate under it.
See PSD2 payment initiation in production: A2A initiation.