EU Council Publishes First-Reading Position on PSD3, Clearing Path to Formal Adoption of Revised Payment Services Directive
On 21 October 2026, the Council of the EU adopted its first-reading position on the proposed Payment Services Directive 3 (PSD3), publishing that position on 23 October 2026 with a view to formal adoption. PSD3 proposes to amend Directive 98/26/EC and Regulation (EU) 2023/1114 and repeal both Directive 2009/110/EC and the existing PSD2 framework. The Council's first-reading position is a procedural milestone in the EU's ordinary legislative procedure, bringing the revised payments regime a step closer to entry into force across member states.
Why this matters
The Council's first-reading position marks a decisive step in replacing the PSD2 framework that has governed European open banking and payment services for nearly a decade. Once adopted, PSD3 will reshape licensing, consumer protection and data-sharing obligations for payment institutions and e-money institutions across the EU. UK-headquartered firms that passport into the EU or operate via subsidiaries will need to assess divergence between PSD3 and the UK's own retained payments regime. The timing, days before the UK Budget, adds pressure on UK policymakers to signal whether domestic payments law will track, diverge from, or seek equivalence with the incoming EU standard.
On the Ground
Financial regulation practices will face immediate demand for PSD3 gap-analysis work from banks, payment institutions, and e-money issuers with EU operations. Licensing teams will need to advise on any new authorisation requirements under PSD3. Trainees should expect to be tasked with mapping PSD3 provisions against current PSD2 implementation in relevant member states and flagging consequential changes to client compliance frameworks.
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