Redefining EU Payments & Ecommerce Security
The Paypers recently released the 5th edition of its Fraud Prevention in E-commerce Report. Besides focussing on fraud prevention strategies and solutions, the report also sheds light on the latest standards and regulations to remain compliant: PSD3 and Confirmation of Payee are notably mentioned by the experts.
The European Commission’s unveiling of the proposed third Payment Services Directive (PSD3) marks a significant stride in reshaping the landscape of payment services within the EU and the EEA. As PSD3 enters the spotlight, its provisions for combating fraud and their implications for ecommerce businesses are poised to redefine security measures and customer experience.
PSD3’s Anti-Fraud Measures: Redefining Responsibility
Fraud mitigation takes center stage in PSD3, signalling a paradigmatic shift in the fight against fraudulent activities. Under PSD3, multiple players within the payments ecosystem are set to assume a broader role in preventing fraud. Notably, data sharing emerges as a pivotal strategy, allowing Payment Service Providers (PSPs) to process personal data for fraud prevention without explicit customer consent.
This monumental step aims to bolster fraud mitigation by leveraging comprehensive data and fostering collective efforts among PSPs to combat fraudulent activities while adhering to stringent data privacy regulations.
SCA Evolution: Balancing Simplification and Authentication Standards
Diverging from the provisions of PSD2, PSD3 introduces alterations to Strong Customer Authentication (SCA).
This revision brings forth the possibility of utilizing two authentication factors of the same category, ostensibly simplifying the payment process. However, concerns linger about the potential compromise in authentication standards, prompting scrutiny amidst the pursuit of a streamlined payment experience.
Confirmation of Payee (CoP): Extending Success and Altering Liability Dynamics
The success witnessed by Confirmation of Payee (CoP) in the UK and the Netherlands is poised to transcend across the entire PSD3 jurisdiction.
Indeed, this expansion announces substantial changes in liability ownership, compelling third parties and PSPs to conduct comprehensive transaction risk assessments, ensuring thorough beneficiary authentication. This move aims to fortify payment security, protecting payers while instilling confidence in authenticating genuine beneficiaries.
Source: The Paypers