EU PSD2 rush pressures online payments
(13 June 2019 - Europe) Europe’s major banks warn that more than one in four online payments will be incomplete because of a lack of preparedness for new European Union (EU) anti-fraud rules from September 2019.
Banks are urgently requesting more time to adapt to the planned changes tabled as part of the EU’s Second Payment Services Directive (PSD2) that will require online payments above €30 to undergo an extra level of verification such as entering a code received via SMS text message.
The measures are designed to reduce fraud but corporates fear they have not been given enough time to prepare. Banking and payments executives said some new systems had not been tested at scale, and many smaller businesses did not yet have access to the necessary software.
Research by the UK Finance trade body estimated that without a significant change before September, between 25 and 30 percent of ecommerce card transactions would become impossible to complete. Banks expect that the rules could lead to a “massive loss of revenue for merchants”, severe disruption for consumers and a surge in complaints that “would overwhelm regular customer service operations”. The warning from trade groups, which together represent more than 5,000 lenders, follows similar complaints from e-commerce groups and payment processors such as Amazon and Stripe last week.
The last-minute scramble to comply with the rules has been compared to last year’s introduction of the General Data Protection Regulation(GDPR), which tightened rules on how companies handle people’s data. Wim Mijs, European Banking Federation CEO, stated “The ecosystem needs a bit more time for full implementation and we are therefore calling on the Commission and the EBA to take action.”