Payment services providers (PSPs) are intermediary companies which facilitate electronic payments between parties. Payment institutions are companies that are not banks, but are authorised to provide payment services.  

On 28 June 2023, the Commission published two proposals: a proposal (PSD3) for an amendment to the current Payment Services Directive (PSD2), and a related proposal for the Payment Services Regulation (PSR). 

On 27 November 2025, after negotiations, the Parliament and the Council reached a provisional agreement on PSR and PSD3.   The agreed text aims to allow easier access to cash  especially in remote areas. Citizens will be able to withdraw cash from retail stores   (maximum €150 but minimum €100), without  having to buy anything.

The agreement aims also to reduce market barriers for 'open banking services' and to prevent their eventual discrimination by account-servicing payment service providers (ASPSPs, usually  banks or other financial institutions). The legislation lists prohibited obstacles to data access, with the aim to allow authorised open banking providers to access related payment account data. At the same time it is reinforces the capability of the users of PSPs to monitor and manage, through a dashboard,  permissions to access their data. Banks are asked  to provide payment institutions with access to payment accounts on a non-discriminatory basis.
Manufacturers of mobile devices and electronic service providers are asked to allow front-end service providers (such as apps) to store and transfer data needed to process payments, on fair, reasonable, and non-discriminatory terms.
The authorisation procedure for payment institutions will be simplified, whilst still 
 including prudential and capital requirements, own-funds calculations, budget forecasts, harmonised timelines, and initial capital proportional to the provider’s risk level and to the payment services provided. Crypto asset service providers already authorised under the Regulation on Markets in Crypto-assets, would go through a streamlined procedure while keeping risk controls and providing only services specified in the application. 

The directive, the PSD3, will amend the current (PSD2). The revised directive aims to update and clarify the provisions relating to payment institutions.  It includes e- money institutions as a sub-category of payment institutions (consequently repealing the second Electronic Money Directive). Furthermore, it includes provisions concerning cash withdrawal services provided by retailers and independent ATM deployers (without a customer purchasing anything) .
The proposal also includes transitional measures regarding existing activities under PSD2 . For example, existing licenses for payment institutions and electronic money institutions are prolonged in validity until 30 months after the directive’s entry into force (one year after the transposition deadline and the beginning of application) on condition that application for a license under this directive is made at the latest 24 months after entry into force.

The negotiated text  needs to be formally adopted by Parliament and Council before it can enter  into force.

Overall, the Commission’s proposed  package of measures  combats and mitigates payment fraud, improves consumer rights further levels the playing field between banks and non-banking institutions and improves the functioning of open banking (when financial information is shared between banks and third-party services)The package also improves the availability of cash in shops and via ATMs, and strengthens overall harmonisation and enforcement.  

On 11 September 2023, the proposal was referred to Parliament’s Committee on Economic and Monetary affairs (ECON). It appointed Ondřej Kovařík (Renew ,Czechia) as the rapporteur. On 14 February 2024, the ECON Committee adopted its report, and proposed amendments in the following areas:
• applications for authorisation;
• initial capital;
• application to exercise the right of establishment and freedom to provide services; 
• services where cash is provided in retail stores without a purchase; 
• services enabling cash withdrawals offered by ATM deployers not servicing payment accounts;
• transitional provisions.    

On 23 April 2024, the ECON report was adopted by Parliament, with 484 votes in favour, 118 abstentions, and 8 against.

After the European elections in 2024, the ECON Committee under the 2024-2029 mandate appointed Morten Løkkegaard (Renew, Denmark) as the new rapporteur.
On 21 October 2024, the ECON Committee decided to open interinstitutional negotiations after first reading in Parliament. On 13 November 2024, this  referral was announced in plenary.

References:

• European Parliament Legislative Observatory, Procedural file on Payment services and electronic money services in the Internal Market, 2023/0209(COD).
• European Commission, Proposal for a Directive on payment services and electronic money services in the internal market (PSD3), COM(2023)366.
• European Commission, Proposal for a Regulation on payment services in the internal market (PSR), COM(2023)367. 
• European Commission, Impact assessment accompanying the proposals on payments services, SWD/2023/231.
• European Commission, Summary of the impact assessment accompanying the proposals on payments services, SWD/2023/232.
• European Commission, Report from the Commission to the European Parliament, the Council, the European Central Bank and the European Economic and Social Committee on the review of Directive 2015/2366/EU on payment services in the internal market, COM/2023/365.
• European Commission, Report from the Commission on the review of settlement finality in payment and securities settlement systems including its application to domestic institutions participating in third-country systems and of financial collateral arrangements, COM/2023/345.
• European Commission, Payment services, website

Further Reading:

• European Parliamentary Research Service, Payment services framework, I. Hallak, briefing, August 2025.

Author: Stefano Spinaci, Members' Research Service, legislative-train@europarl.europa.eu