Have you heard of PSD2 – the second EU Payment Services Directive? If you’re in business and you take payments electronically, you should read on.
PSD2 is designed to open up the EU market to new categories of payment services provider, offering a range of new payment services to businesses and consumers.
A key provision of PSD2 is Secure Customer Authentication (SCA), which requires payment processors to implement a two-step authentication process for the purposes of reducing fraud.
According to the Directive, the requirement for Secure Customer Authentication will come into effect from 14 September 2019. Banking authorities in Ireland and the EU say that a migration period will apply during which payments systems will continue to operate without disruption.
The eCommerce Association of Ireland (eCAI) has warned, however, that Secure Customer Authentication will take time for businesses to implement and test. There are no indications yet as to the likely duration of the migration period, or when a hard deadline might be set, after which payments might fail in the absence of SCA.
Getting Irish Business #PSD2Ready
A key event will be held in Dublin’s City Hall on 4 September. This will be a seminar featuring two panel discussions lasting one hour each. The first is a panel of leading payment and policy experts who will focus their discussion on the explanation and implications of the PSD2 directive on businesses.
The second panel will feature development experts discussing the technical changes required to ensure online traders are ready and compliant. Both panles will take questions from the audience and a networking reception will follow.
The event will be attended by 200 web developers, service providers, business associations and retailers along with press and government body representatives.
Tickets cost €299 for those wishing to attend the seminar in person. However, the event may also be attended virtually for free. Visit psd2ready.ie to submit your free registration for the live stream, and to receive updates as the day approaches.
What is Secure Customer Authentication (SCA)?
Secure Customer Authentication (SCA) means that payment processors will need to support a two-step process for authorising payments. Its main purpose is to lower fraud.
With SCA, when customers go to the cart and authorise their payment with a password, they will now have to authorise again by a different method. It could be a text, an email, biometrics, as long as it’s from a second source.
Earlier forms of SCA had a reputation for discouraging sales. However, the latest 3DSecure 2.0 protocol has been designed to support a more frictionless experience. It works by coupling customer information, such as your address, with background data like device ID, or transaction history.
For instance, if your transaction is consistent with other transactions you have made, then the bank may decide it’s okay to proceed, but if you bought a sandwich one day in Dublin and hopped on a plane to New York and booked a hotel over there, it might be challenged and sent for further authentication.