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The Appearance of Open Banking in Europe

The Appearance of Open Banking in Europe


On 14 September 2019 new requirements for authenticating online payments will be introduced in Europe as part of the Directive EU 2015/2366 on payment services in the internal market (Payment Services Directive, “PSD2”).

PSD2 contributed to the growth of open banking in the European Union. Open banking is generally defined as a system of technologies that allows consumers to access traditional banking or financial services and products through the use of digital means and tools (e.g. payment services may be provided by Facebook or Amazon). 

The provisions of PSD2 entered into force on 13 January 2018, however, the detailed provisions concerning strong client authentication will be applicable from 14 September 2019. As of this date, payment service providers must apply additional authentication to “customer-initiated” online payments within Europe. Strong customer authentication, or two-factor authentication, uses two of three types of the following identifications: “something you know” (password, PIN), “something you own” (computer, mobile) and “something you are” (digital fingerprint, voice). This would mean that the current practice of the banks (e.g. one-time code sent to the client’s phone or fingerprint authentication through the client’s mobile banking app) will no longer comply with the new requirements. Banks will need to start declining payments that require two factor authentication and do not meet the aforementioned criteria.

With these changes, the European Union Commission aims at creating a more unified and well-organised European payments market and ensuring safer and more secure payments, as such, safeguards for consumers.

By Rita Parkanyi, Partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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