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Sponsored: Getting a head start on PSD2

PSD2, the new and improved version of the European Union’s Payment Services Directive has arrived and been in force since January 2018. Promising increased innovation potential for banks and payment providers, enhanced security for customers and improved trust as a result, as well as an end to surcharging, it’s shaking up the digital payment landscape dramatically.

Any transaction that begins in Europe, travels through the area or ends in Europe must adhere to the rules. For Australian retailers, this is essential in order to start or continue operating in one of the biggest and wealthiest markets in the world.

But what exactly do the new rules cover and how will they impact retailers?

Opening up banking

One of the most transformative elements of PSD2 for businesses is XS2A, or access to accounts. In the past, only the account issuer had the ability to access an account, whereas now, any approved third party can initiate payments.

As well as increasing access, it also makes it possible to pay for online services and goods by using direct bank transfers, reducing the reliance on the debit or credit card. As a result, the cost of taking a bank payment is typically lower than a card payment, with funds transferring faster and with a lower risk of fraud.

Clamping down on fraud

Hand-in-hand with XS2A comes the Strong Customer Authentication (SCA) regulation, designed to tighten security on finance without restricting freedoms. From now on, two-factor authentication approaches are mandatory for European financial transactions.

Retailers can achieve this in a number of different ways. Whether using passwords and biometrics, or trusted devices and key codes, the need to keep the users’ payment journey as frictionless as possible must be a key factor in any decision. With one-touch payments being so popular, seamless incorporation of security elements, such as biometrics, is crucial to ensure customers get the ease of access they’ve come to expect, but also benefit from a major uptick in security standards. This increased peace of mind is likely to increase sales and enable more impulse purchases, as the transaction is just one button and a fingerprint scan away.

For many retailers, change can be inherently scary. But it doesn’t have to be. The new PSD2 regulations are an opportunity for Australian retailers, if they are ready to embrace them.

Download the Worldpay guide to PSD2 now or contact Worldpay.

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