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BizReport : Advertising : June 05, 2020

Businesses re-opening post-COVID, but more struggles ahead

As businesses focus on reopening after the COVID-19 shutdown, there are more concerns on the horizon. Chief among them is the looming PSD2 deadline. PSD2, like the predecessor GDPR, is related to how banks and other entities verify payment information and is set to go live at the end of 2020. According to one expert, though, many merchants and brands aren't ready.

by Kristina Knight

Kristina: A key element of the upcoming PSD2 implementation is Strong Customer Authentication (SCA). What is this?

James Pinborough, SCA Product Manager, Accertify: [Strong Customer Authentication] rules will govern the way banks or other payment services providers check that the person requesting access to their account or trying to make a payment is the person permitted to make a payment. SCA will also require validation of specific payment instructions, and in some cases, additional authentication.

SCA compliance can be met through appropriate processes and technologies, such as authentication tools like EMV® 3-D Secure (3DS).

Kristina: What effect has the COVID crisis had on merchants and brands plans to implement PSD2 strategies?

James: COVID-19 has had significant impacts on businesses around the world. Many businesses have needed to shift their business model, close temporarily, or accommodate an increase in e-commerce sales as consumers are increasingly shopping online. For many merchants, these changes have taken priority over technical implementations. Because of this, the Financial Conduct Authority (FCA) in the UK has extended the UK enforcement date to September 2021.

Kristina: Is there still time for brands to come into compliance with the upcoming changes?

James: Yes, but it's important for merchants to plan ahead. Ideally merchants should have their solution in place well in advance of their country compliance date, in order to make sure everything is running smoothly and in compliance with SCA. Merchants should be aware of the roll-out plan for their country, which may include managed roll-out periods where an increasing percentage of non-compliant transactions could possibly be declined in the lead up to the enforcement date. 3DS is seen as a strong solution to SCA for online transactions, but it takes time to implement and test. Merchants that have a defined and well-managed solution to ensure minimal customer friction balanced with SCA compliance, will be able to provide a better customer experience with less disruption to their business.

Kristina: If brands aren't ready for PSD2, what are the implications for their business?

James: If a merchant is not SCA-compliant in time for the deadline, this will risk an increase in declined sales. Under the regulation, issuers are required to authenticate the customer for any in-scope transactions. However, if the merchant is not able to support authentication, the sale will have to be declined.

Kristina: What steps should merchants and brands be taking now to ensure they are ready for the changeover that is coming at year's end?

James: At a minimum, merchants should have an authentication solution deployed. Merchants can also take the opportunity to leverage some of the exemptions that are allowed within the regulations. Each merchant should analyse their transaction profile to understand which payments in-scope vs. out-of-scope are and which qualify for exemptions. They should then reach out to vendors to understand which solution best fits their transaction profile and resourcing.

Some merchants may find that SCA has little or no impact on them due to their sales being out-of-scope. In addition, they may find that a lot of their sales qualify for an exemption based on the value. Some may determine that given their transaction profile they should request 3DS on every sale. There is no one-size-fits-all solution. Each merchant needs to identify the approach and solution that best suits them and their customers, within the bounds of SCA compliance.

Accertify helps merchants ensure regulatory compliance while taking advantage of SCA exemptions, ultimately helping to provide a positive check-out experience for customers.

Tags: Accertify, advertising, customer authentication, ecommerce, ecommerce trends, GDPR, PSD2, SCA trends, secure payment

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