3rd February 2020

PSD Bond accepted for use in Ireland

The revised Payment Services Directive (PSD2) and second Electronic Money Directive (EMD) oblige authorised payment institutions (APIs), E-money Institutions (EMIs) and other non-bank payment service providers to protect customer funds, a practice known as ’safeguarding’. When Protean Risk launched PSD Bond in the UK mid-2019 as an alternative or complementary method of safeguarding they talked about gaining acceptance from other European regulators.

On 6 December 2019 we were delighted to report that in addition to the UK, PSD Bond was suitable for use in Lithiuania. We are now able to confirm that PSD Bond can, also, be used in Ireland.  

While most firms deploy the segregation method, the payment flow, foreign exchange and non-relevant funds can each introduce uncertainly and complexity that makes it difficult to be 100% confident about which funds to segregate and for how long. Many payment service providers (PSPs) are tying up more cash than they need to and depleting operational funds. Or, worse, they are not compliant with the regulations and this can have dire consequences that include fines, loss of licence and criminal prosecution.

Using PSD Bond as a complementary or alternative method of safeguarding can address these and other issues. It is why PSD Bond is being used by an increasing number of APIs and EMIs, including some of the largest and well-known brands. These firms are finding that by using insurance as a complementary safeguarding method they are saving money, improving capital efficiency, alleviating regulatory risk, strengthening consumer protection – and even extending their value proposition.

Tristan Sargent, Director, Fintech and Payment Services at Protean Risk, said: "We are pleased that firms operating in three European countries can enjoy the benefits it offers. PSD Bond remains the only insurance contract that meets the requirements of PSD2 and EMD and we will be working hard to extend the policy into other European countries in the coming weeks and months. 

Find out about PSD Bond - Safeguarding Insurance