Psd2 starmoney4/24/2023 ![]() While less fraud is obviously good news for businesses, SCA requires changes to your checkout or payment flow. SCA is designed to reduce payment fraud, especially card-not-present fraud. Buying and selling goods online (eg selling your car with Cazoo)īusinesses that take payments online also need to comply with SCA.Instant account and identify verification.Instant account funding (eg Trading 212).Auto-saving and smart budgeting (eg Plum and Chip).Open banking examples that we have already seen include: For businesses, open banking offers significant benefits including making online accounting easier, accelerating loan applications, helping you take payments and sign up your customers quickly and securely. This gives businesses the opportunity to offer new products and services. PSD2 has paved the way for open banking, giving customers the right to access their payment accounts and initiate payments via third-party providers (TPPs). What does PSD2 mean for businesses? PSD2 affects all businesses providing payment services or accessing payment account data in the EEA, as well as those further afield with subsidiaries in the EEA. The UK Government (HM Treasury) brought PSD2 into force in the UK in 2017 in the form of the Payment Services Regulations (PSRs). Crucially, PSD2 stated that new regulations must be implemented as law in local markets within the EEA by 13 January 2018. It eventually entered into force in January 2016. What is the implementation date for PSD2? PSD2 was first proposed by the European Commission in July 2013. In the UK, the deadline for full SCA implementation is 14 March 2022Ĭonsumer protections Finally, PSD2 is aimed at improving consumer protections by requiring timely complaint resolution, as well as more stringent reporting on fraud incidences and system downtime.In France, SCA came into full effect on.In Germany, SCA has been enforced since 15 March 2021.The original SCA enforcement deadline was 14 September 2019, but several countries across the EEA announced delays or phased implementation. The introduction of SCA for card payments has progressed on a different timeline. SCA for open banking payments has been in place since 2018, making open banking a safe and secure service for consumers. Possession: something they own (such as a mobile device).Inherence: something they are (a fingerprint, for example).Knowledge: something they know (a password, for example).Specifically, it requires two-factor authentication (2FA), where a customer must provide two different forms of identification from different categories. SCA means consumers need to take extra steps to pay online to prove that they are who they say they are, and not a fraudster making a payment without authorisation. Reducing fraud PSD2 intends to reduce fraud by introducing Strong Customer Authentication (SCA). Businesses can integrate open banking services into their products by partnering with a regulated TPP, without having to become regulated themselves. In the UK, companies can offer AIS and/or PIS by becoming registered with the Financial Conduct Authority (FCA). Under PSD2, third-party providers (TPPs) can offer Account Information Services (AIS) and/or Payment Initiation Services (PIS). PSD2 allows regulated companies to access this data, as well as initiate payments, as long as they have the customer’s express consent. Greater competition in the payments industry Previously, only banks had the right to access the customer financial data they held. What is the purpose of PSD2? In short, the purpose of PSD2 is to increase competition in the payments industry, enable the growth of new payment methods, improve customer protections, and reduce fraud. PSD2’s full name is the Revised Payment Services Directive, and it applies to the entire European Economic Area (EEA). It also requires online payments to be compliant with Strong Customer Authentication (SCA), with the use of two-factor authentication (2FA). It gives customers the right to access their payment accounts and initiate payments via third parties. ![]() What is PSD2 in simple terms? PSD2 is an EU law that has paved the way for open banking.
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