Is your E-Commerce Business Prepared For the New Payment Service Directive?
There have been some recent changes in the banking industry that will affect all e-commerce businesses. So, if your business takes online payments, it’s important to ensure you adhere to the new guidelines. Here is a summary of the recent changes and what you need to do to be compliant.
PSD2
This is the acronym for the European Commission’s revised Payment Service Directive. In short, this will stop banks having the monopoly on their customers’ accounts and payments.
It will allow third party companies to move money, pay bills or analyse spending, and banks will have no choice but to allow access.
Why change?
The directive has positive ambition behind it. The aim of the new guidelines is to improve the security of internet payments, give consumers stronger protection and create more scope to service innovations. We rarely see innovations and guidelines in the same sentence!
What this means for e-commerce
Merchants have until September 2019 to comply with one key area – strong consumer authentication. The recommendation to businesses is to be integrated with 3D Secure’s 2.0 update by the 14th April 2019 in order to meet card brand guidelines.
As 3DS 1.0 was developed before the advent of smart phones, it was necessary for them to bring in an updated system. 2.0 has made some significant improvements to mobile payments.
3DS 2.0 supports app-based authentication and use of digital wallets, whilst still maintaining conventional browser e-commerce transactions.
Every cloud has a silver lining
The system update has some great benefits for your business, as well as complying with EU law.
There will be increased fraud protection and security, improved mobile purchase processes and it will deliver data ten times faster, leading to quicker check out times. This should lead to improved sales and better customer satisfaction.
Visa carried out a study on 3DS 2.0 which showed that drop off rates of shoppers reduced by 70% – with more shoppers completing a purchase and check out times were 85% quicker(1).
Typically, we see half of all e-commerce traffic coming from phone and tablet users, so it’s essential that these customers get the smoothest possible service on your website. Which is why we are ready to embrace this change.
Source (1): Frictionless Experience with Verified by Visa,” a risk-based authentication case study