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PSD2: what measures to implement to comply with the regulations

May 2019 by Nexway

The European Payment Services Directive (PSD) aims to regulate payments within the common market. Its second version (PSD2), adopted in November 2015, should be generalized from September, 14th 2019 in all Member States. The purpose of this revised Directive is to facilitate the use of electronic payment services on the Internet by making them cheaper and more secure.

The changes introduced by this new regulation, which Nexway recalls below, are likely to have a profound impact on e-commerce in Europe. Concerned companies that are not preparing for these new requirements could see their conversion rates drop significantly after the implementation of the SCA, the Strong Customer Authentication, one of the measures of the PSD2, on September 14th . For example, according to a Cybersource survey conducted in February 2019, half merchants (46%) believe they are not enough prepared for the SCA.

With this in mind, Nexway, a leading provider of solutions to monetize digital activities and connect companies to the global digital market, has defined three pillars to combine compliance and optimized customer experience:
• to be equipped with a dynamic and intelligent solution to fight fraud effectively
• to migrate to the right 3DS protocol
• to implement an exemptions management strategy and reduce frictions

In addition to supporting new authentication methods, the successful processing of exemptions will become a key element in creating an optimal payment experience. It will therefore be appropriate for national regulators and individual banks to develop solutions or to rely on competent partners to manage, among other things, this complexity.

As a reminder, the PSD2 includes several components and imposes new rules directly concerning merchants and their customers:
• Prohibition of overcharging: it will be prohibited to apply a surcharge when paying by debit or credit card, both online and in a physical store.
• Strengthening consumer rights: the deductible payable by the customer in the event of fraudulent payment by card before opposition is reduced to 50 euros (compared to 150 euros previously), and over shorter periods.
• Strong Customer Authentication (SCA): at least two identification factors (code, password, device available, biometric data, etc.) are required for online payments above 30 euros. All merchants who make acquisitions with an European licensed acquirer are concerned.
• Opening the market to new players: organizations will be required to provide access to account information through a secure communication channel.

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