PSD2, or the Second Payment Services Directive, is a European regulation that aims to enhance competition and innovation in the financial services sector. It requires banks to open their payment services and customer data to third-party providers, enabling new financial technologies and services to emerge. This promotes a more integrated and efficient payment ecosystem across the European Union. Additionally, PSD2 enhances consumer protection by introducing stronger security measures for online payments. It mandates the use of Strong Customer Authentication (SCA) to ensure that transactions are secure, thereby increasing trust in digital payments and reducing fraud.