iovation, Aite Group reveals the PSD2 impact to payment security and services

Since September 2019, payment service providers in the European Economic Area (EEA) have to comply with the directives requirements for strong customer authentication (SCA) and third party access to bank accounts. In the contrary case, they risk to get their payment provider license revoked.

The report is entitled ‘PSD2: Advent of the new payments market in Europe’, and analyses the consequences for the global online payments market around the revised Payment Services Directive (PSD2). It stresses the fact that the stricter requirements for fraud prevention in the EU will drive fraud to other regions such as the US, as well as the fact that most companies are unprepared for PSD2. A Mastercard study found that only 25% of European online merchants are aware of SCA requirements under PSD2, 14% already support SCA, 28% will be SCA ready by September 2019, and 24% have no plans to support SCA.

Moreover, PSD2 will bring two major changes:

• Strong customer authentication, as PSPs must apply two or multifactor authentication methods for all high risk electronic transactions

• Third party access to payment accounts should be offered by banks, card issuers, and other financial institutions for the following services:

1. Account information services, such as balance and transaction information

2. Initiating payments directly from customers bank accounts

3. Availability of funds check to see if there are sufficient funds on the cardholders bank account