Three quarters of businesses are not ready for Europe’s second Payment Services Directive (PSD2), a bobsguide poll conducted during a webinar last week demonstrates.
Respondents said they were either not ready (3.6%), getting ready (28.6%), or weren’t sure (42.9%).
During the webinar, Roger Lester, fraud market expert at Featurespace, explained the difficulties merchants are experiencing with the rollout of PSD2 from a fraud perspective, particularly after the recent European Banking Authority opinion on elements of Strong Customer Authentication (SCA) under PSD2.
“Even now there are deliberations about what a pushback looks like. Is that six months or 18 months? Is that for everybody or just parts of Europe?” said Lester. “From a merchant perspective its quite a challenging time at the moment because they are trying to understand a clear message of what is happening, and not only that but there is, in some respects, a historic stigma around 3D Secure and the impact that card holders have when they are presented with 3DS messaging when undertaking a transaction.
“I think that there is some reluctance of merchants wanting to embrace the PSD2 change. They know that they have to, but there is that concern of will there be a drop off in genuine transactions especially when you’ve got a lot of merchants out there that have very low or no fraud levels at all,”
In its opinion, the EBA recognized the complexity of PSD2 and identified concerns for non-payment service providers (PSPs) such as e-merchants. Moreover, the authority stated that national regulators may need to grant additional time to the payments industry to comply with the rules.
Lester was joined by Chris Hubbard, senior product manager at TSYS, and Dejan Miladinovic, commercial director at moneycorp.
Issuers have had to reverse their focus with the introduction of regulation like PSD2 from reducing the levels of customer interruption over the past five to ten years, according to Hubbard.
“As issuers are very focused on customer experience, they are trying to make all of those transactions as frictionless as possible. The regulations that have come out about PSD2 have kind of reset that. Issuers have had to look at things slightly differently,” said Hubbard.
For Miladinovic, potential threats for the cross-border payments landscape include anything that removes trust from the system, particularly the recent trade wars.
“We are in a couple of them [trade wars] happening at the moment protectionism, isolationism these are some of the events which can slow down the globalization and growth in cross-border transactions,” said Miladinovic.
“I think something that could potentially impact everyone across the board is a recession, which would cause a decrease in flows in cross-border payments.”
Loss of trust in the system can be as important as macro-economic movements, according to Miladinovic.
“This can be participants that don’t have the policies procedures up to par, but also I think that always comes with combination with regulators. What we are seeing is that the capacity of regulators across the PSD area is not equal. There is a certain sense of regulators’ arbitrage when it comes to registration of businesses. I think the combination of the two can result in a loss of trust in the system,” he said.
Listen to the webinar on-demand to hear more from Featurespace, TSYS, and moneycorp on the rising threats facing cross-border and cross-channel payments