Allocation of Liability in Case of Payment Fraud: Who Bears the Risk of Innovation? A Comparison of Belgian and Portuguese Law in the Context of PSD2

Abstract

The number of fraudulent payment transactions is increasing over Europe. In many cases it remains impossible to recover the amounts from the fraudster, so that the question arises whether the payment service provider (PSP) or the payment service user (PSU) must bear the risk. Within the EU, the second Payment Services Directive (PSD2) allocates liability between the PSU and the PSP. Important concepts when allocating liability are gross negligence and strong customer authentication. Equally important is the question who bears the burden of proof.