Europe’s payments market remains a patchwork of national regulations despite ongoing moves towards harmonisation. For FinTechs and other payment firms, this fragmentation creates major operational headaches, especially when building cross-border services that need to align with multiple regulatory regimes at once.
According to Corlytics, new rules such as PSD3 and DORA have been introduced to support resilience and encourage innovation in the financial sector. However, these frameworks alone won’t erase differences in how rules are enforced locally. Under PSD3, for example, payment institutions (PIs) and e-money institutions (EMIs) will face updated capital requirements, new authorisation conditions and stricter winding-up planning. These measures aim to safeguard the financial system but inevitably increase the upfront compliance burden for firms trying to scale.
For many companies, the real challenge lies in building systems that can adapt quickly when the rules themselves are applied differently in each EU member state. This uncertainty puts pressure on teams responsible for onboarding, KYC, fraud controls and incident response. The need to stay agile is greater than ever—yet agility is difficult to achieve when compliance demands shift with every national interpretation.
Some of this tension came through at the Future of Payments and Compliance forum in Barcelona, where one panellist noted: “100% compliance at all times is close to impossible. However, we need to deal with that.” Recent penalties underline this point—UK regulators fined HSBC for customer failings, while the CFPB in the US penalised Sutherland Global and Chime for misleading borrowers. Citi also faced cross-border action for governance lapses.
A deeper look at reporting rules shows just how inconsistent Europe’s regulatory environment can be. A suspicious transaction in Germany might lead to different reporting obligations compared with Spain. BaFin, Germany’s regulator, has even punished firms for filing too many low-quality suspicious reports. Meanwhile, Spain’s FIU (SEPBLAC) expects every suspicious transaction—attempted or completed—to be reported immediately and in precise formats.
For FinTechs operating in multiple countries, this means spending time and money tailoring their platforms to comply with varying national standards—often at the cost of speed and efficiency. The alternative, non-compliance, carries huge risks. One forum speaker highlighted how poor training can allow suspicious accounts to slip through, with refunds still processed on flagged accounts.
Leading firms now recognise that compliance can’t just be the job of legal teams—it must be embedded into every department and workflow. From engineering to customer support, every click and every API call should reflect a compliance-first mindset.
Since 17 January 2025, DORA has demanded that regulated firms prove they can manage ICT risks in real time, classify incidents correctly and test digital resilience across operations. The EBA has confirmed that DORA applies to all regulated financial players, including EMIs and AISPs, but gaps remain. A recent European Court of Auditors audit pointed out that payment processors and gateways still fall outside DORA’s scope, leaving blind spots in systemic risk oversight.
The newly launched Anti-Money Laundering Authority (AMLA) offers hope for more consistent standards. But as one executive admitted: “I’m confident and scared at the same time.” This mixed feeling captures the challenge facing payment companies today.
Fixing compliance in Europe’s fragmented payments market means building resilience and adaptability from day one. Businesses ready to succeed are designing compliance into their technology and operations instead of bolting it on later. This shift is crucial for turning regulatory obligations into a growth advantage.
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