EU Unveils Sweeping Reforms to Drive Development in Fintech Trade

Industry Changes That Lift The Veils
The laws governing the digital funds industry are being reformed by the European Commission, one of the changes being the facilitation of information sharing across cost service providers, which helps to reduce fraud. According to a press release from the Commission, the changes also implement the updated Payment Services Directive (PSD2), which provides steps to expand consumers’ rights to refunds in the event that they become victims of fraud. Furthermore, the price intends to grant non-bank cost service providers access to all EU cost programmes, establishing a level playing field for both banks and non-banks while also providing reasonable protections to non-bank providers and preserving their entitlement to a checking account.

The package of measures from the European Commission comes at a time when the market is moving away from the hegemony of big banks and common funds platforms such as Mastercard and Visa. According to information obtained by the Commission, the EU’s digital money increased from €184 trillion in 2017 to €240 trillion in 2021, partially due to the Covid-19 epidemic.

The updated PSD2 will support the implementation of safeguards on the cost companies market, allowing customers to recover their right to reimbursements in certain situations. The financial institution’s capital requirements will likely increase and non-bank cost service providers (CSPs) will likely be subject to more stringent regulatory oversight. This will likely increase the playing field for competitors and lead to a reduction in the number of environmentally friendly cost providers.

Customers will be able to access a greater range of services through open banking, including ones that were previously limited to use by banks and other financial institutions. Additionally, improvements to cash companies will let customers store their money securely and move it easily between accounts. Finally, the regulation will impose stricter guidelines on the custody and transfer of currency, which will improve consumer protection and allow new players—including cryptocurrencies—to enter the financial industry and foster an increasingly transparent financial system.