Germany: Update - Government Proposal for the implementation of the Second Payment Service Directive (PSD II)

14 February 2017

Johannes Wirtz, Dr. Michael Jünemann

On 8 February 2017, the German Federal Government (Bundesregierung) made a proposal to implement the Second Payment Services Directive (PSD II) into German national law. The PSD II was adopted by the European Council and European Parliament on 8 October 2015 (we reported this in German). The proposal includes legal provisions regarding regulatory law as well as civil law. Before the bill is introduced in a parliamentary session, the Government has to send its proposal to the Federal Council (Bundesrat) stating its opinion on the bill.

A key change introduced by PSD II is the regulation of so-called ‘third party payment service providers’. This includes ‘payment initiation service’ and ‘account information service’. While the former will be added to the payment services catalogue and will require authorization, a special mandatory registration for the account information service (we reported this in detail in German) will be introduced.

Further significant changes are made through the introduction of strong customer authentication in order to improve the security aspects of payment services. This authentication must be based on the use of two independent elements categorised as knowledge, possession and inherence.

Since the announcement of the PSD II was made in January 2016 and in order to meet treaty obligations, the proposal is required to come into force on 13 January 2018.