Focus: Payment Institution Law

The landscape of European payments has been rewritten. The transition from the Second Payment Services Directive (PSD2) to the Third Payment Services Directive (PSD3) and the new Payment Services Regulation (PSR) is now fully operational in 2026. This isn’t just a nomenclature change; it is a fundamental shift in where liability lies.

From Directive to Regulation: The End of Interpretation

One of the biggest frustrations under PSD2 was “fragmentation”—different EU countries interpreted the rules differently. By moving much of the framework into a Regulation (the PSR), the EU has created a “Single Rulebook.” A Payment Institution (PI) licensed in Lithuania now operates under the exact same technical standards as one in France, facilitating easier “passporting” of services across the bloc.

The 2026 Instant Payment Mandate

As of 2026, the distinction between “Standard” and “Instant” payments is disappearing. Under the new mandate:

• Mandatory Offering: All PIs that offer credit transfers in Euros must allow customers to send and receive funds within 10 seconds, 24/7.

• Price Parity: Institutions are strictly forbidden from charging more for an instant transfer than they do for a standard one. This has effectively killed the “Premium Instant” revenue model that many banks relied on.

The “Impersonation Fraud” Liability Shift

Fraud prevention has taken center stage. In 2026, the legal concept of “Vishing” and “Spoofing” has been codified into liability law. If a fraudster uses technical means to make a phone call or SMS look like it’s coming from the bank (Spoofing), the Payment Institution is now presumed liable for the loss.

To mitigate this risk, PSR mandates “IBAN/Name Matching.” Before a payment is finalized, the institution must check if the name of the recipient provided by the sender matches the actual owner of the IBAN. If there is a mismatch, the PI must warn the user. If they fail to provide this check, they cannot claim the user was “grossly negligent” and must refund the stolen funds.