FB pixel

PSD2 could drive fraud to non-EU payment markets as biometric authentication increases


Most companies are not prepared for the Europe’s new and revised Payment Services Directive (PSD2), but that will not stop stricter requirements for fraud prevention from driving fraud to other regions, such as the U.S., according to a report from iovation and Aite Group.

PSD2: Advent of the new payments market in Europe” analyzes the consequences of the new rules, which come into force in September 2019 and require service providers operating in the European Economic Area to provide strong customer authentication (SCA) and third-party access to bank accounts, for the global payment services market. A recent survey by Mastercard indicates that only 25 percent of online merchants in Europe are aware of their SCA responsibilities under PSD2, that 14 percent currently support SCA, 28 percent expect to meet the September deadline, and 24 percent have no plans to introduce SCA, according to the announcement. Mastercard also predicted last year that PSD2’s SCA requirements will drive a rapid increase in consumer biometrics use.

“The zeitgeist of regulations with extra territorial effect like GDPR continues with PSD2. This will have long-standing operational implications to companies wherever they are based,” said iovation Compliance Manager, Mark Weston. “The merchants that succeed post PSD2 will be those that make consumer authentication as effortless as possible through methods like ‘invisible’ device-based authentication and biometrics. And with the likes of Facebook and Google becoming payment processors, merchants are going to have to compete with an ever widening marketplace.”

The SCA requirements imposed by PSD2 are for multi-factor authentication methods applied to all electronic transactions unless they qualify as “low risk.”

“Varying choices in the implementation of the SCA requirements on a country and individual bank level, differences in interpretation of the directive, and different timelines may create confusion that merchants have to navigate,” said Aite Group Senior Analyst, Ron van Wezel. “Businesses should be sprinting to get their house in order.”

Article Topics

 |   |   |   | 

Latest Biometrics News


Best biometrics use cases become clearer as ecosystems mature

Biometrics are for digital identity, socio-economic development, air travel and remote identity verification, but not public surveillance, the most-read news…


UK Biometrics and Surveillance Camera Commissioner role survives as DPDI fails

UK parliament will not pass data protection legislation during the current session, following the announcement of the general election in…


EU watchdog rules airport biometrics must be passenger-controlled to comply with GDPR

The use of facial recognition to streamline air passenger’s travel journeys only complies with Europe’s data protection regulations in certain…


NZ’s biometric code of practice could worsen privacy: Business group

New Zealand is working on creating a biometrics Code of Practice as the country introduces more facial recognition applications. A…


Demonstrating value, integrated payments among key digital ID building blocks

Estonia has achieved an enviable level of user-centricity with its national digital identity system through careful legislation and fostering collaboration…


Strata Identity launches uninterrupted identity services product

There are a few things that can be more annoying than your office computer logging you out of applications because…


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Most Read This Week

Featured Company

Biometrics Insight, Opinion

Digital ID In-Depth

Biometrics White Papers

Biometrics Events