Mobile payments have evolved rapidly, and one regulation has played a massive role in that transformation: Payment Services Directive 2 (PSD2). If you’re marketing a fintech app or handling mobile payments, understanding PSD2 is key to building trust, staying compliant, and delivering a secure user experience.
What is Payment Services Directive 2(PSD2)?
PSD2 is an EU regulation that modernizes how you will handle digital payments across Europe. It’s an update to the original Payment Services Directive (PSD), and it came into force to make online transactions more secure while encouraging innovation in the financial sector.
What sets PSD2 apart? It opens the door for open banking, allowing third-party providers (like fintech apps) to access bank data (with user consent) through APIs. It makes everything from faster payments to smarter budgeting apps possible, all while improving transparency and security for end users.
Why PSD2 matters for mobile marketers
If your app handles payments or processes sensitive financial data, PSD2 isn’t just a regulatory requirement—it’s an opportunity. Here’s why:
- Enhanced security: PSD2 introduced Strong Customer Authentication (SCA), which requires multi-factor transaction authentication. It means fewer fraudulent transactions and more trust from users.
- Open banking opportunities: With APIs now connecting banks and third-party apps, you can offer personalized services that weren’t possible before—think direct account-to-account payments, tailored financial insights, or seamless in-app purchases without traditional card networks.
- User trust: Data protection is non-negotiable. PSD2 compliance signals to users that your app prioritizes their privacy and security, helping you stand out in a crowded market.
For fintech marketers, positioning your app as PSD2-compliant can also be a key differentiator when targeting users concerned about security and transparency.
Key features of PSD2
Strong Customer Authentication (SCA)
SCA requires at least two of the following for verifying users during payments:
- Something the user knows (e.g., PIN or password)
- Something the user has (e.g., smartphone or hardware token)
- Something the user is (e.g., fingerprint or facial recognition)
This extra layer of protection helps reduce fraud while keeping payment flows user-friendly.
Open banking & APIs
PSD2’s open banking framework allows fintech apps to access banking data (with consent) securely via APIs. This means smoother payment experiences and personalized financial services—all without users needing to switch between apps.
Improved transparency
Clear communication about fees, transaction details, and data usage helps build trust between users and service providers.
How PSD2 Impacts Mobile Payment Experiences
For marketers, PSD2 means striking the right balance between security and convenience. While SCA might add an extra step to the checkout process, apps that handle this smoothly (e.g., through biometric authentication or streamlined flows) can maintain conversion rates while boosting user confidence.
Additionally, open banking enables new growth opportunities—whether it’s launching innovative payment solutions or tapping into banking data to create personalized user journeys that boost retention.
In conclusion
PSD2 laid the groundwork for a safer, more interconnected payment ecosystem. For mobile apps, compliance isn’t just about ticking regulatory boxes—it’s about delivering secure, frictionless experiences that meet today’s evolving user expectations.
Staying on top of PSD2 and leveraging its open banking capabilities can give your app a competitive edge while keeping user trust at the core of your growth strategy.