PSD2 – Payment Services Directive 2015/2366 is the second payment services directive to replace the first 2007/64 / EC. The Directive on payment services in the internal market was adopted on 25 November 2015 by the European Parliament and the Council. Its provisions are aimed at harmonizing relations in the market of payment services, obliges to obtain a license to provide financial services, regulates the rights of consumers, users and providers of payment services, and also consolidates and ensures the security of electronic transactions. This is a legal act that at least representatives of financial institutions and lawyers need to know.
The task of reliable authentication is to reduce fraud and payment fraud, all for the convenience of the client and minimal impact on his experience in the transfer process.
As for two-factor authentication, it is a method of access control by which customers must provide two types of information, for example: knowledge is a PIN code – information that the client knows and biometric data – fingerprint, face recognition, etc.
The industry protocol is 3DC (3D Secure), which is the software that enables the authentication process (fingerprint, face recognition) and makes the transfer process more convenient through Apple Pay and Google Pay digital wallets. However, some transactions do not require such authentication, it is a low-cost payment, recurring payment, and the customer can cancel the authentication process, noting the exceptions in the settings.
Two new regulated entities are emerging under PSD2 directive:
TEC support is a radical change in Fintech. TEC is about convenience, centralization of information and enhanced control for consumers.
So PSD2 is the most discussed topic for the banking industry, which is a paradigm shift for banks in the payment business.
Our consulting team monitors the level of authorization and fraud for all our clients, warns them of any potential problems, and helps to find solutions.