PSD2: How Open Banking Rules Changed Payments Forever

When you use a budgeting app that pulls your spending data straight from your bank, or pay for a ride with a third-party app that skips the card reader—you’re seeing PSD2, the European Union’s second Payment Services Directive that forced banks to open their systems to third-party providers. Also known as Open Banking, it’s not just a regulation—it’s the reason your phone can now act like your wallet, accountant, and financial advisor all at once.

Before PSD2, your bank held your data like a locked safe. You could only access it through their app or branch. PSD2 changed that. It said: if you give permission, other companies can safely access your account information and even initiate payments on your behalf. That’s why apps like Mint, YNAB, and Revolut can now show you your spending across all your accounts without you logging into each one. It’s also why companies like PayPal and Stripe can now offer instant bank transfers instead of waiting days for ACH. This isn’t magic—it’s a legal requirement in Europe, and it’s spreading.

PSD2 doesn’t just help consumers. It forces banks to compete. If your bank’s app is slow or clunky, you can switch to a better one without changing accounts. That’s why neobanks like Revolut and Starling exploded in Europe—they didn’t need to build their own banking infrastructure. They just plugged into yours, legally, through PSD2’s open APIs. And it’s not just about apps. PSD2 also made strong customer authentication (SCA) mandatory. That means every payment over €30 needs two forms of verification—like your password and a fingerprint. It’s not perfect, but it’s cut down fraud by over 30% in countries that enforced it.

What’s missing from most discussions is how PSD2 connects to everything else you see here: embedded finance, virtual cards, and even CBDCs. If you can securely share your data with an app, you can also let that app give you a loan, insure your purchase, or even hold your money. That’s embedded finance in action. And if governments start issuing digital currencies, PSD2’s open infrastructure is the first place they’ll plug them in. This isn’t just about banking rules—it’s about who controls your money.

Below, you’ll find posts that show how PSD2’s ripple effects touch everything from virtual cards to fintech compliance costs. You’ll see how businesses built tools around it, how startups navigated its rules, and why even small shops now use payment systems that didn’t exist five years ago. No theory. No fluff. Just how it actually works—for you, your wallet, and your business.