Will PSR and PSD3 Solve the Account Access Problem for Payment Institutions?
For many payment and electronic money institutions, opening and maintaining payment accounts at banks has long been a challenge. For years, payment service providers (PSPs) face lengthy onboarding processes, refusals to open accounts, and even forced account closures. Yet access to banking services is essential for PSPs, not only to collect fees for provided payment services, but especially to safeguard customer funds.
Against this background, the European Union has introduced a significant update of the EU legal framework in payments: the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3). The new texts replace, merge and update the existing framework for payment institutions and electronic money institutions, which is currently spread across the Second Payment Services Directive (PSD2) and the Second Electronic Money Directive (EMD2).
Regarding account access, the PSR contains measures specifically aimed at addressing ongoing difficulties in access to payment accounts. PSD3 revises the framework for safeguarding customer funds and brings payment institutions and electronic money institutions into a single framework, with a single definition for both institutions: ‘payment institution’. Unless stated otherwise, references to payment institutions in this article should therefore be read as including electronic money institutions.
The question is whether PSR and PSD3 will solve the account access problem for payment institutions.
How the PSR Responds
Under PSD2, Member States are already required to ensure that payment institutions have access to payment account services on an objective, non-discriminatory and proportionate basis. Access must also be sufficiently extensive to enable payment institutions to provide payment services effectively. Where an application for a bank account is refused, the bank should notify the competent authority and provide duly substantiated reasons.
In practice, however, the existing PSD2 framework provides limited and uneven protection against account refusals and closures across the EU, particularly where decisions are justified by genericreferences to financial crime risks. It is this type of unwanted ‘de-risking’ behaviour by commercial banks that the European Commission is aiming to target with the successor of PSD2.
The PSR builds further on these rules, but places much greater emphasis on how account access decisions are taken, justified and communicated to the competent authority. The Regulation prescribes when access may be refused or terminated, introduces more detailed requirements regarding refusal and termination decisions, and extends account access rights to agents and licenceapplicants.
Access may, for example, be declined where opening or maintaining an account would mean a breach of AML/CFT requirements under the AMLR or where the institution fails to provide the necessary information to open an account. In contrast, generic references to financial crime risk are no longer sufficient. However, banks that refuse a safeguarding account on the basis of AMLR-infringements are prohibited under PSR to disclose any detail on the nature of those infringements to the (aspiring) payment institution. This is likely to place greater responsibility on competent authorities, which are provided with the specific grounds for refusal, to determine whether the AML/CTF concerns warrant the denial of a safeguarding account.
These changes are further reinforced by an explicit right of appeal. Payment institutions, their agents and licence applicants will be able to challenge account refusal and account closure decisions before the competent authority. The move from a directive to a regulation should also reduce differences in the way these protections apply across Member States.
Taken together, these reforms make account access decisions more transparent, better substantiated and easier to challenge. Payment institutions, their agents and licence applicants are therefore in a stronger position when faced with an unjustified refusal or termination of their safeguarding account.
However, it remains unclear whether, under PSR & PSD3, (1) banks still are allowed to choose not to offer safeguarding accounts as a product to payment institutions at all, and (2) if banks do offer safeguarding accounts, whether they may maintain a transparent policy whereby they can categorically exclude payment institutions with certain characteristics (e.g. those providing payment services to platforms offering adult content) in advance.
How PSD3 Changes Safeguarding
PSD2 and EMD2 already contain a comprehensive safeguarding framework based on either the segregation of customer funds or insurance and guarantee-based arrangements. PSD3 further develops these rules and places greater emphasis on concentration risk. Under PSD2 and EMD2, concentration risk is primarily addressed through national supervisory expectations. PSD3 formalizes these expectations by requiring institutions, where appropriate, to avoid concentration risk and to consider whether safeguarding all customer funds with a single institution remains appropriate.
PSD3 also broadens the range of arrangements that may satisfy safeguarding requirements, including certain settlement accounts within designated payment systems and, where permitted by Member States, certain post office giro institutions. In practice, however, the extent to which these options will reduce payment institutions’ dependence on commercial banking relationships remains to be seen. Access to safeguarding through designated payment systems may prove limited in practice (see for example the January 2025 Decision of the ECB), while post office giroinstitutions are not available in all Member States.
As a result, PSD3 is unlikely to fundamentally alter institutions’ dependence on commercial banking relationships for safeguarding purposes. At the same time, its greater emphasis on concentration risk may require some institutions to diversify safeguarding arrangements across multiple banking partners, potentially increasing the number of bank accounts that need to be maintained.
Will the Reforms Solve the Problem?
The PSR strengthens the position of payment institutions that are refused access to a safeguarding account by making such decisions more transparent, better substantiated and easier to challenge. PSD3, meanwhile, introduces important changes to the safeguarding framework, but is unlikely to fundamentally reduce institutions’ need for commercial banking relationships. PSD3 may even increase the need to open safeguarding accounts with multiple banks to tackle concentration risks.
Taken together, the PSR and PSD3 are unlikely to fully solve the account access problem, but they do leave payment institutions better equipped to navigate it than they are today.
How Projective Group Can Help
Projective Group supports payment and electronic money institutions that experience difficulties obtaining, maintaining or expanding banking relationships. We assist firms with licenceapplications, assess safeguarding and AML/CTF frameworks, and advise on the practical implications of the new PSD3 & PSR account access regime.
Curious about the impact of PSD3 and PSR on your payment business? Call or email us for an informal introductory discussion. Of course, we will also keep you informed of the latest developments via our newsletter.