PSD2 felt like a bombshell piece of legislation when it first came in, with high hopes of open banking transformation. And while the regulation has been successful in some areas, inefficiencies like high fraud rates have also been identified, leading to the introduction of the PSR. The EU’s recent report listed “unharmonized implementation”, “cross-border difficulties” and “disproportionate requirements and costs” as barriers under PSD2. In this article, learn all about PSR and how it will fix those challenges.
Trustpair goes further than European regulation in terms of fraud prevention, by providing ongoing account validation. Contact an expert to learn more!
Key Takeaways
- The Payment Services Regulation (PSR) is a new EU regulation that directly applies across all member states, no national transposition needed.
- It works alongside PSD3 to replace PSD2, addressing fraud, open banking, and consumer protection gaps.
- After a provisional political agreement in November 2025, final texts were published in April 2026. The PSR is expected to apply from mid-to-late 2027, following a 21-month transition period.
- The PSR introduces mandatory IBAN-name verification (Verification of Payee), stronger SCA rules, and enhanced fraud liability frameworks.
- Tools like Trustpair’s account validation platform already deliver the payee verification standard that PSR is mandating, helping businesses stay ahead of compliance requirements.
What is the Payment Services Regulation (PSR)?
The Payment Services Regulation (PSR) is a new EU regulation introduced alongside the Third Payment Services Directive (PSD3) to replace the existing PSD2 framework. It directly applies across all EU member states without requiring separate national implementation, ensuring consistent consumer protection and payment security rules throughout the EU.
The PSR primarily aims to:
- Strengthen fraud prevention, including mandatory payee verification before any transfer
- Expand consumer rights and transparency around fees and charges
- Harmonize open banking rules across the EU
- Level the playing field between banks and non-bank payment service providers (PSPs)
Unlike PSD2, which was inconsistently implemented across member states, the PSR removes that ambiguity by acting as a regulation — binding and self-executing in every EU country simultaneously.
Trustpair goes further than European regulation in terms of fraud prevention, by providing continuous, automated account validation before every payment. Contact an expert to learn more.
What is the difference between PSR and PSD3?
PSR and PSD3 are two complementary pieces of legislation proposed together in June 2023. They work as a package to modernize EU payments, but serve different functions.
In short: PSD3 sets who can operate as a payment service provider and under what conditions. The PSR defines how those providers must behave — with whom, under what rules, and at what standard of security.
PSR key obligations
The PSR focuses on banks’ obligations in terms of:
- Accessible financial services: Transparent, non-discriminatory rules for all customer groups, including vulnerable populations
- Fraud prevention: Transaction monitoring, mandatory information-sharing between PSPs, and IBAN-name verification before all transfers
- Open banking data sharing: Standardized API access for third-party providers (PISPs and AISPs)
- SCA upgrades: Refined Strong Customer Authentication, including biometrics and passkeys
PSD3 key obligations
PSD3 addresses the structural side of EU payments:
- Harmonized licensing timelines (3-month approval from complete application)
- Consolidated PI and EMI licensing into a single framework
- Consumer data dashboards showing which third parties hold permissions
- Improved cross-border supervision, including “triangular passporting”
- Alignment with DORA (Digital Operational Resilience Act)
What are the main fraud prevention measures in the PSR?
This is one of the most impactful areas of the PSR for businesses. The regulation introduces a comprehensive anti-fraud framework that includes:
Mandatory IBAN-name verification (Verification of Payee)
Before executing any credit transfer, PSPs must verify that the IBAN provided matches the name of the intended beneficiary, and flag any mismatch to the payer. This requirement is already in force for SEPA Instant transfers since October 2025 under the Instant Payments Regulation, the PSR extends it across all payment rails.
Fraud data sharing between PSPs
PSPs will be required to share fraud-related intelligence across the industry, enabling earlier detection of scam patterns and social engineering attacks.
Enhanced liability rules
The PSR extends refund rights for victims of Authorised Push Payment (APP) fraud and clarifies liability between PSPs and their customers, a significant upgrade from PSD2’s framework.
Why this matters for companies
Technologies like Trustpair’s automated account validation platform already deliver what PSR mandates: real-time verification of bank account details before any outgoing payment is processed. This detects suspicious changes to vendor bank details, flags duplicate payments, and blocks transfers to fraudulent accounts, going beyond what regulation alone requires.
What is the PSR and PSD3 implementation timeline?
The legislative journey of PSR and PSD3 has moved significantly since 2023. Here is the updated timeline as of July 2026
- June 2023 — European Commission proposes PSD3 and PSR
- 2024–2025 — European Parliament and Council review and negotiate draft texts
- November 2025 — Provisional political agreement reached between Parliament and Council
- April 2026 — Final compromise texts published (Council, 23 April 2026); ECON Committee vote (5 May 2026)
- H2 2026 — Expected publication in the EU Official Journal (June–September 2026 window)
- 2027 — Entry into force; 21-month transition period begins
- Mid-to-late 2027 — PSR begins to apply across all EU member states
- 24 months after entry into force — IBAN-name check (Verification of Payee) obligation and related liability apply
How should businesses prepare for PSR compliance?
With the transition period expected to begin in 2026 and the PSR applying from 2027, preparation should start now. Key areas of focus:
- Upgrade payee verification processes — Implement IBAN-name matching before executing any outgoing payment. Trustpair’s platform already automates this continuously, not just at onboarding.
- Review SCA setups — Assess whether current authentication methods meet the updated requirements, including biometric and passkey support.
- Audit your open banking APIs — Ensure third-party data access is consistent, well-documented, and secured to PSR standards.
- Map fraud data sharing obligations — Identify which fraud signals should be shared with other PSPs and establish the operational processes.
- Update outsourcing and vendor contracts — Revisit agreements with technical service providers and SCA vendors to address liability allocation.
- Engage regulators early — Open dialogue with national regulators on transition timelines and re-authorisation expectations (especially for PIs and EMIs under the merged licensing regime).
A recap of the Payment Services Regulation
The Payment Services Regulation (PSR) is a landmark piece of EU payments legislation that will apply directly across all member states from 2027. Working alongside PSD3, it upgrades the fraud prevention, open banking, and consumer protection standards that PSD2 introduced — and removes the inconsistencies that came from 27 different national implementations.
For finance, compliance, and treasury teams, the PSR is not just a regulatory checkbox. The mandatory IBAN-name verification requirement alone signals a shift: knowing who you’re paying, and verifying it continuously, is becoming a legal baseline, not just a best practice.
Trustpair’s automated account validation platform already meets and exceeds that baseline, validating supplier and counterparty bank details in real time, at every payment, to prevent fraud before it happens.