Open Banking Fraud Controls Tighten Under PSD3: What Fintechs, PSPs and High‑Risk Merchants Must Prepare For

Introduction and Context

The European payments ecosystem is entering a new chapter as Open Banking providers strengthen their fraud‑prevention frameworks in anticipation of PSD3 and the upcoming Payment Services Regulation (PSR). Recent industry updates highlight that Account Information Service Providers (AISPs), Payment Initiation Service Providers (PISPs), banks and EMIs are upgrading risk models, implementing enhanced authentication flows and aligning data‑sharing standards to meet incoming regulatory expectations. PSD3 is not yet fully finalised, but the direction is clear: a more robust, standardised and supervised Open Banking environment designed to address rising fraud cases and improve consumer trust.
For fintech founders, compliance leaders and product teams, this is more than a regulatory update. It signals that the era of “lightweight” Open Banking connections is ending. Strong Customer Authentication (SCA) requirements will tighten, transaction‑risk models must become near‑real‑time, and service providers will face increased accountability for fraud losses previously absorbed by banks. As Open Banking continues expanding into payments, A2A (account‑to‑account) checkout and high‑velocity payout flows, fraud‑resilient architecture is becoming mission‑critical—not optional.

What This Shift Means for European Payments and Open Banking Providers

Stronger controls reshape the relationship between AISPs, PISPs, banks, EMIs and end merchants. PSD3‑driven changes include:
• Risk‑based SCA enhancements for Open Banking payment initiation.
• Stricter liability-sharing models between banks and PISPs.
• Standardised APIs designed to reduce gaps exploited by fraudsters.
• Higher expectations for transaction monitoring, device fingerprinting and behavioural analytics.
• More data-exchange obligations between institutions for fraud‑related signals.
For payment providers, this introduces new operational and compliance pressures. PISPs initiating A2A payments must validate identities, detect anomalies and manage edge cases—without adding friction to the user journey. EMIs and PSPs offering Open Banking‑powered pay‑ins or pay‑outs must ensure their partners’ APIs and internal controls meet the evolving requirements. High‑risk verticals—gaming, crypto, adult, dating, digital content—will face more scrutiny as their transaction patterns are often targeted by fraud networks.
The strengthened rules also impact card acquiring and APM ecosystems. As A2A payments become safer and more regulated, they will increasingly compete with debit cards, local APMs and e‑wallets. Merchants should expect Open Banking to move from a “nice‑to‑have alternative” to a mainstream payment method—but only if security concerns are addressed with robust, regulator‑compliant architecture.

Risks and Opportunities for Fintechs, EMIs, PSPs and Merchants

The PSD3‑driven environment creates a dual landscape: higher compliance risk but also strong commercial opportunity for those who adapt early.
Opportunities:
• Increased trust in Open Banking will speed up adoption of A2A payments.
• Merchants get lower fees than cards and faster settlement.
• Fintechs can differentiate by offering real‑time, fraud‑resilient customer journeys.
• EMIs and PSPs can strengthen their positioning by aligning early with PSD3‑level requirements.
Risks:
• Significant investments required for fraud‑prevention technology.
• More operational load: dispute management, liability handling, fraud case exchanges.
• Increased supervision from regulators on high‑risk merchant payment flows.
• Barriers to entry for smaller AISPs and PISPs unable to afford compliance upgrades.
High‑risk merchants should anticipate stricter onboarding requirements, more real‑time monitoring and higher expectations regarding customer identity validation. Crypto exchanges and brokers, in particular, will see more alignment between AML frameworks and Open Banking fraud rules as regulators tighten oversight across all fiat‑to‑crypto and crypto‑to‑fiat payment channels.

How ICE-PAY.COM Helps You Navigate This Shift

ICE-PAY.COM plays a critical role in helping fintechs, EMIs, PSPs, neobanks, crypto companies and high‑risk merchants navigate the upcoming PSD3 Open Banking landscape. As a consulting and merchant‑services partner—not a bank or EMI—ICE-PAY.COM supports clients in securing the right regulated partners, designing resilient payment architectures and aligning with best‑practice compliance expectations.
ICE-PAY.COM assists clients with:
• Payment architecture design integrating SEPA, SWIFT, card acquiring, APMs and Open Banking safely and compliantly.
• Sourcing banks, EMIs and PSPs that support robust, PSD3‑ready fraud frameworks.
• Designing multi‑IBAN setups optimised for real‑time payouts, reconciliation and risk segregation.
• Reviewing and uplifting fraud controls: KYC/KYB, transaction monitoring, risk scoring, velocity rules.
• Supporting licensing strategy and regulatory alignment across EU jurisdictions.
• Advising high‑risk verticals on how to pass compliance reviews and maintain stable payment relationships.
By acting as an expert “co‑pilot”, ICE-PAY.COM ensures that businesses implement solutions that protect them operationally, commercially and reputationally while maintaining friction‑free payment flows.

Practical Next Steps for Fintechs and Merchants

To prepare for PSD3‑aligned Open Banking fraud requirements, organisations should:
• Audit Open Banking partners: API quality, monitoring capabilities, fraud dispute models.
• Upgrade compliance flows: behavioural analytics, device profiling, IBAN‑name checks.
• Review merchant categories: ensure high‑risk flows have dedicated controls.
• Map liability exposure: understand which party covers what in case of fraud.
• Evaluate multi‑provider strategies: avoid reliance on weak or slow‑moving PISPs.
• Consider external advisory: bring in ICE-PAY.COM to assess architecture or secure better banking, EMI or acquiring partners.
Aligning early reduces future cost, speeds up regulatory approval processes and positions companies as credible operators in a more regulated Open Banking era.

Interview: Expert Insights on PSD3 and Open Banking Fraud Controls

Interview with a Senior Payments and Compliance Specialist

Q: Why are fraud controls becoming such a central piece of PSD3?
A: Because Open Banking payments are scaling. When volume grows, organised fraud follows. Regulators want a safer baseline before A2A becomes a mainstream alternative to cards.
Q: Which companies are most at risk?
A: PISPs, EMIs and high‑risk merchants. These sectors move money quickly, so fraud losses can snowball without strong real‑time detection.
Q: What should leaders prioritise in 2025?
A: Partner selection and architecture. Many businesses underestimate how much fraud mitigation depends on upstream banks and PSPs. Choose wisely and build for resilience.

FAQ

Is PSD3 already in force?
Not yet, but providers are preparing early based on published drafts and regulatory expectations.
Will Open Banking become mandatory for payments?
No, but its safety and adoption will significantly increase under PSD3.
Does PSD3 affect high‑risk merchants?
Yes. Stricter fraud rules apply to all flows, and high‑risk sectors face more scrutiny.
Can ICE-PAY.COM provide a licence?
No. ICE-PAY.COM advises on licensing strategy and connects clients with suitable regulated partners.
Will Open Banking replace card payments?
Not fully, but A2A will grow faster as controls and user trust improve.

Related Searches

• PSD3 and Open Banking
• A2A payment adoption
• Open Banking fraud prevention
• Multi‑IBAN fintech strategy
• High‑risk merchant payment flows
• European payments regulation

Conclusion

The strengthening of Open Banking fraud controls ahead of PSD3 is a necessary evolution. As the EU prepares for a more resilient and competitive payments market, providers must adapt quickly—improving monitoring, securing better partners and building compliant, scalable architectures. For fintechs, EMIs, PSPs and high‑risk merchants, the coming months will determine who leads in the next generation of Open Banking‑enabled payments. ICE-PAY.COM supports organisations in navigating these changes, ensuring that payment flows, compliance frameworks and partner relationships are ready for the PSD3 era.