Fraud prevention and authentication solution providers iovation have released a report in collaboration with research and advisory firm Aite Group titled, “PSD2: Advent of the new payments market in Europe.”
The report was developed with original research and analyses the possible consequences for global online payment companies and the market around the revised Payment Services Directive (PSD2).
In reference to a recent study by Mastercard, it was discovered that only 25% of European online merchants are aware of SCA requirements under PSD2.
Iovation Compliance Manager, Mark Weston commented on the importance of two major changes that comes with PSD2 – mandating that banks have to provide open APIs to third party providers (TPP)s and strengthen security requirements for payment services in the form of strong customer authentication (SCA).
He said: “These are both large tasks, especially for large banks that have complex infrastructures. We are now less than six months away from when the SCA requirements come into full effect which means companies really need to consider their customer strategy.
“The winners post PSD2 are going to be those that consider the entire buyer’s journey to bring down their overall fraud rate, maximize their exemptions based on reference fraud rate, and minimize friction for those transactions that are subject to SCA.”
Since companies providing payment services in the EEA are subject to the regulation, businesses with headquarters outside Europe may also need to comply.
The report concludes the stricter requirements for fraud prevention in the EU will drive fraud to other regions such as the US – it also warns that most companies are unprepared for PSD2.
Weston continued: “The scope of PSD2 is much broader than the original Payment Services Directive. Now any PSP providing payment services in the EU will be required to have a payment license and must comply with the directive.
Earlier this year iovation released its 2019 Gambling Industry Report.