January 18, 2018
This past Saturday, the Second Payment Services Directive (PSD2) governing payments, security and fraud in the European Union went into effect.
The PSD2, which revises the original PSD to explicitly include requirements for online merchants and payment providers, broadly aims to make electronic payments in Europe more secure. It mandates stricter security requirements, stronger authentication procedures for online transactions and more protection for consumers in the area of fraud liability.
It also seeks to engender competition in the payments sector through the philosophy of “open banking.” Under PSD2, third-party payment providers and merchants have direct access to customer information through open API’s. Unfortunately, according to a recent study, many merchants are prepared neither for the new law’s requirements nor its opportunities.