January 11, 2018
The Second Payment Services Directive (PSD2) is set to go live this Saturday in Europe and nearly half of U.K. retailers have never heard of it, according to a new study. Two London-based consultancies interviewed senior leaders from more than 30 large and midsize retailers and found 48 percent are unaware of PSD2 and 67 percent are not ready to comply.
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. For those reasons, businesses that will be affected have generally looked at the revised directive as costly and onerous.
There are, however, provisions of the new law that merchants can leverage to their advantage, according to Tim Richards, principal consultant at Consult Hyperion and a co-author of the report. But, only if they are ready.
“The impending shift to ‘Open Banking’ through the implementation of PSD2 is one of the hottest issues in banking and payments,” said Richards. “However, it seems that merchants and the wider retail technology community are unaware of the regulation and its far-reaching ramifications. The use of two-factor authentication and access to customer bank accounts will allow retailers to dramatically lower card fees, mitigate fraud and limit the scope of data breaches. But arguably the biggest value is in access to consumer financial data that opens up new ways to do business.”