The new Payment Directive PSD2 is due to enter into force in mid-September. Many merchants and customers do not feel well informed and poorly prepared.

Online shopping becomes a torture” – this is how the FAZ titled an article about the new payment directive PSD2 at the beginning of August. When it comes into force, customers will have to identify themselves much more strongly when making online purchases. The Payment Service Directive 2 provides for strong customer authentication for payments in e-commerce for greater security. Online and card payments must then be confirmed by two independent features (two-factor authentication) from the categories knowledge (e.g. PIN or password), possession (e.g. mobile phone, card, TAN generator) and inheritance (e.g. fingerprint). The new directive was transposed into national law in January 2018. Nevertheless, many dealers and customers do not feel sufficiently prepared. This is also shown by the new study “Online-Payment 2019” by the EHI Retail Institute. According to the study, only a good two thirds of the retailers surveyed have created the technical prerequisites for implementation in the online shop. The planned start for PSD2 was 14 September 2019.

What exactly do retailers fear about PSD2?

EHI Managing Director Michael Gerling: “The information level of many retailers is still partly insufficient. In addition, many retailers seem to be reluctant to implement the system because they fear a loss of user-friendliness when paying in their shop.” According to 61 percent of the retailers surveyed, the complexity of online payment will increase. 82 percent of the respondents expect more cancellations due to the increased complexity for the customer. Due to the changed payment process, companies expect more queries from customers. Accordingly, 68 percent fear an increase in service volume. In addition, 39 percent of the retailers surveyed expect high costs when changing the payment process. The experience of merchants who already offer the 3D Secure process for credit card payments confirms these fears. 40 percent of them have already noticed an increase in the number of cancellations after selecting the credit card payment method since the implementation in their shop.

Handelsverband Deutschland also sees dangers

The PSD2 issue has also brought the German Trade Association onto the scene. Ulrich Binnebößel, HDE expert for payment systems, sees a major hurdle in the fact that important regulatory details have been unclear for too long: “The so-called regulatory technical standards (RTS) were only published in March last year. It was only with these regulations that the work on legally compliant two-factor authentication could finally begin. Dealers are now dependent on being supplied with ready-made systems that they can integrate into their payment processes. The time for this installation and especially for extensive functional tests is now too short.” He would like more time so that retailers and end customers can familiarise themselves with the new requirements: “At the very least, however, an extended period of 18 months to mandatory application can prevent the worst. After all, aborted purchases and dissatisfied customers are neither in the interest of the legislator nor of the retail trade.

Bafin announced deadline extension at the end of August

An extension of the deadline is also what many European industry associations are calling for. For example, the European Payment Insititutions Federation has written a brand letter. In it it puts the loss for online merchants due to cancellations of purchases due to the PSD2 at 57 billion euros throughout Europe in the first year. We believe that the payment ecosystem needs a transition period of at least 18 months and a longer period in clearly defined use cases, with important milestones and clear and consistent metrics that are identified during this period and take into account retailers’ peak times. The German Federal Financial Supervisory Authority (BaFin) has heard the voices of the industry. It announced on 21 August that it would for the time being forego strong customer authentication for credit card payments on the Internet. How long this transition period will last “will be determined by BaFin after consulting the market participants and coordinating with the EBA [European Banking Authority] and the national European supervisory authorities,” the authority said.


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Link: In the study “Online Payment 2019“, the EHI Retail Institute points out the risks associated with the implementation of the new payment directive PSD2.

Image: pixabay, EHI Retail Institute