The EU’s second Payment Services Directive (PSD2) is making paying in European online stores safer thanks to strong customer authentication (SCA). The European Banking Authority’s objective behind this move is to combat fraud and make online payments safer.
At present, it’s often enough to simply enter your credit card number to pay online, particularly on websites based in other counties. That will soon be a thing of the past in European online stores.
What does it mean for your customers?
Your customers will soon have to verify their identity using at least two of the following ways to prove that they are who they say they are:
- Something they know (like a PIN)
- Something they have (like a card reader or mobile phone)
- Something they are (like a fingerprint)
What does it mean for your business?
The National Bank of Belgium is giving businesses and banks until 31 December 2020 to make the necessary changes to their online payment processes:
- Your payment provider or professional association should have already contacted you about updating your online store accordingly. Check with them what you need to do to ensure that your business is fully SCA-ready by the interim deadlines and the full enforcement deadline of 31 December 2020.
- Currently (since 25 August 2020), EU law obliges banks to gradually decline online payments that aren’t SCA-compliant and require businesses to have the payment authorised by the customer.
- All transactions that aren’t compliant by the start of 2021 will be declined. Only larger payments will be declined initially, but it will gradually apply to smaller payments as well.
