How Smarter Risk Analysis Will Shape the Next Generation of Payments

The Shift Is Underway

The next evolution of the EU’s Payment Services Directive—PSD3—isn’t just about stronger authentication. It’s about smarter fraud prevention.

Where PSD2 focused on adding friction to stop bad actors, PSD3 emphasizes real-time decision-making, better data, and dynamic exemptions for low-risk transactions. The goal is clear: reduce fraud without breaking the user experience.

But the bar is higher now. Banks and payment providers won’t just be judged on fraud outcomes—they’ll be expected to prove how those outcomes are achieved. That means deeper data, better monitoring, and systems that can adapt.

Why Dynamic Exemptions Matter More Than Ever

Under PSD2, banks could skip Strong Customer Authentication (SCA) for low-value transactions—if their fraud rates were below strict thresholds. The model was simple: low fraud, less friction.

PSD3 keeps those exemptions, but it raises the expectations around how risk is evaluated. It’s not enough to say a transaction is low risk. Institutions must show it—with data, logic, and real-time analysis.

Dynamic exemptions aren’t just a regulatory feature—they’re a user experience unlock. Fewer authentication prompts. Faster checkouts. Less drop-off. But they only work if the fraud prevention strategy behind them can support it.

From Static Rules to Contextual Risk

Most traditional fraud systems rely on static rules. These rules catch common attack patterns, but they struggle with nuance. They don’t adjust when customer behavior changes. They can’t distinguish between suspicious and unfamiliar.

That’s the gap PSD3 is pushing institutions to close.

Modern fraud monitoring needs to consider multiple layers of context:

• Has this customer used this device before?

• Is the transaction location consistent with recent behavior?

• Does the checkout flow follow normal patterns?

• What does the authentication data say?

Effective risk analysis doesn’t just flag what’s risky—it explains why. That’s only possible when the system has access to the right inputs, structured in the right way, in real time.

Data Depth Is the New Differentiator

One of PSD3’s more interesting updates is around data access. It explicitly allows PSPs to process personal data for fraud prevention without requiring explicit consent. That unlocks new potential—but also highlights a growing challenge: most systems aren’t built to handle that data effectively.

Data is often siloed, incomplete, or locked away in third-party platforms. Even when it’s available, it’s rarely used to its full potential. A fraud prevention strategy that depends on shallow or delayed data can’t keep up—not with the pace of fraud, and not with the demands of PSD3.

Smarter fraud monitoring means better data ingestion. Not just basic transaction details, but contextual signals—device fingerprints, behavioral biometrics, authentication metadata—and the ability to analyze them together in real time. That’s what sets modern TRA (Transaction Risk Analysis) systems apart from the rule-based tools of the past.

The Infrastructure Challenge

PSD3 also raises the operational bar. Institutions will need to:

• Conduct regular fraud audits

• Report anomalies immediately

• Demonstrate compliance through transparent monitoring systems

• Prove their TRA models are grounded in current, contextual data

For many, this won’t be a plug-and-play transition. Older infrastructure wasn’t built for adaptive, real-time risk analysis. And bundled fraud tools—often offered by PSPs or core banking providers—aren’t built for flexibility. They work until they don’t.

When the rules change, or attack patterns evolve, institutions need tools that can adapt quickly. That means moving beyond “good enough” and toward systems that are purpose-built for real-time decisions.

Serving Two Very Different Markets

The path forward looks different depending on the institution.

Established banks often have the resources and volume to qualify for higher exemption thresholds—but they also face integration hurdles. Legacy systems, vendor lock-in, and fragmented data can make adding new capabilities feel complex. For these organizations, the goal is often to enhance what’s already in place—filling gaps, not starting over.

Newer entrants, by contrast, are often more nimble. They build their fraud stack from the ground up, optimize for digital-first experiences, and don’t have the same infrastructure drag. But they also face resource constraints. They need tools that are easy to implement, adaptable to new regulation, and scalable as they grow.

In both cases, the need is the same: smarter tools that can operate in real time, handle complexity, and evolve with regulatory expectations.

Integrated vs. Standalone: A Question of Control

There’s an ongoing conversation in the market around whether integrated or standalone fraud tools are more effective.

Integrated tools offer speed—just turn them on inside your payments platform. But that convenience often comes at a cost. Default settings are rarely tuned to your business. False positives creep in. Fraud rules go stale. And because they’re built for general use, customization is limited.

Standalone platforms offer more control. They let institutions ingest their own data, define their own risk logic, and make adjustments as needed. That makes them more adaptable—but only if the system is built to handle that complexity.

The tradeoff is clear: ease vs. precision, speed vs. control. The best solutions find ways to offer both.

A Smarter Way Forward

The stakes of PSD3 go beyond compliance. Institutions that invest early in smarter monitoring will be positioned to reduce fraud, improve approval rates, and deliver smoother customer experiences—all while staying ahead of evolving regulation.

This is exactly where Fraud Capture fits in. It’s built to ingest richer data—like behavioral patterns, device trust, and authentication metadata—and turn it into actionable, real-time insights. Whether layered on top of existing infrastructure or used as a core TRA platform, it helps institutions earn and maintain exemption thresholds with confidence.

As PSD3 takes shape, the real differentiator won’t be who has the lowest fraud rate. It’ll be who understands their fraud risk the best—and can prove it.

The insights in this post are based on industry research, conversations with banks and fraud prevention experts, as well as our own experience. The content is for general information only and not intended as legal, financial, or technical advice. While Enlace strives for accuracy, the information may not reflect the latest developments.