76 percent of European online shoppers have never heard of PSD2
There are major discrepancies in awareness levels between retailers and online consumers when asked about EU’s Payment Services Directive 2 (PSD2) regulation, that says consumers will need to go through enhanced security measures such as biometric authentication for online transactions of over €30 ($33), according fraud protection company Riskified following a European-wide survey of 2,000 consumers and 200 retailers.
As many as 88 percent of retail companies in Europe are under the false impression that online shoppers are familiar with EU’s PSD2 regulation, however 76 percent of consumers have no idea what it is.
Under PSD2, customers have to go through a multi-factor authentication process to verify their identity, possibly including receiving codes on their phones or providing biometric data. The survey says 32 percent of consumers in Europe are not willing to go through the transaction verification measures required by PSD2, preferring to cancel their online purchase. Although they are aware of the impact PSD2 has on their profit, 22 percent of retailers have not taken any measures to reduce the negative impact.
“Fraud is a major concern in eCommerce,” said Eido Gal, co-founder and CEO, Riskified. “We’re always in favor of better security, but it shouldn’t have to be a tradeoff with the customer experience. Unfortunately, some of PSD2’s security requirements could have a detrimental effect on online shopping, leading to unhappy customers and cart abandonment.”
Riskified develops a product called PSD2 Optimization and claims its machine learning algorithm can help retailers maximize revenue and deliver a positive customer experience under the PSD2 directive.
“As these results show, anything that interferes with the online checkout process puts merchants at risk of losing customers and revenue,” Gal further explained. “As PSD2 comes into effect, merchants should do everything they can to continue to provide excellent customer experience, while keeping transactions secured and fraud levels as low as possible.”
EU members had until September of this year to implement PSD2, yet the European Banking Authority (EBA) has agreed to allow conditional extensions of the deadline for implementing strong customer authentication (SCA) in accord with the regulation, giving online vendors in Europe a way to remain compliant while finalizing their adoption of biometrics and other authentication factors.