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Glossary · Finance and compliance

PSD2 and open banking

PSD2 is the European payment services directive that requires banks to give authorized third parties access to their customers’ accounts, with the customer’s consent. That API access is what is known as open banking.

PSD2 and open banking: the details

Directive (EU) 2015/2366 created two regulated roles: account information service providers, which can read balances and transactions, and payment initiation service providers, which can order a transfer from the customer’s account. It also introduced strong customer authentication: confirming operations with two independent factors.

For a company, what matters is what it enables: reading bank transactions automatically and reliably, without downloading files or sharing passwords, and initiating collections by transfer. You don’t need to be a regulated entity to benefit; the usual route is to connect through a licensed provider that aggregates the banks. The account holder’s consent expires and has to be renewed periodically.

PSD2 and open banking in a project

We use open banking for reconciliation: transactions come in on their own every day and are matched against invoices and outstanding receivables.

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