PSD2 (Payment Services Directive 2)
PSD2 is the second iteration of the European Union’s Payment Services Directive, aimed at regulating payment services and providers across the EU and EEA. It promotes innovation, consumer protection, and increased competition in the financial services sector, while enhancing the security of online payments and banking transactions.
A key feature of PSD2 is the requirement for Strong Customer Authentication (SCA) and the opening up of banking data via APIs to authorised third parties — a foundation for Open Banking.
What it means for telemedia
In the telemedia ecosystem, PSD2 has had a significant impact on mobile billing, especially on Direct Carrier Billing (DCB) in EU markets. It introduced stricter consent and authentication rules to reduce fraud and increase transparency, requiring that users explicitly confirm each transaction using secure methods such as one-time passwords (OTPs), biometrics, or app-based authentication.
Telemedia providers offering DCB-based services in PSD2-regulated countries must ensure their flows meet SCA standards and provide clear, compliant user experiences. This includes informing users of charges upfront, offering easy opt-out mechanisms, and securing explicit double opt-in where required.
PSD2 has also paved the way for new billing alternatives like Pay by Bank, which leverages Open Banking APIs to allow direct account-to-account (A2A) payments with user authentication — reducing reliance on cards and wallets.
Example in use
A mobile subscription platform operating in Germany updates its billing flow to comply with PSD2. Users who initiate a DCB subscription must confirm the payment through a one-time SMS OTP, followed by an in-app authentication step. The provider also implements automated consent logs and spend limit notifications.
These changes ensure compliance while maintaining user experience.
Why it matters
For telemedia companies operating in the EU, compliance with PSD2 is not optional — it’s critical for legal operation, payment success, and user trust. While PSD2 introduced complexity into traditional billing models, it also created new growth opportunities through Open Banking, A2A payments, and secure mobile-first experiences.
Providers that embrace the directive’s goals — security, transparency, and competition — can adapt faster and innovate smarter.
Related terms
Strong Customer Authentication (SCA), DCB, Open Banking, A2A Payments, Pay by Bank, Consent Management, Payment Regulation, EU Compliance, Secure Billing Flows, Customer Authentication
