Large Enterprise
Omnichannel commerce, billing and payments solutions for large merchants and corporates
Understanding the Impact
For merchants who continue to accept electronic payments from European customers it's important to understand how new regulations will impact payments and revenue - as well as what's required to help ensure compliance. The "Understanding and Preparing for PSD2" whitepaper streamlines the complicated mandates and simply delivers the key points.
The Main Requirement for PSD2, Strong Customer Authentication
All non-exempt, customer-initiated electronic payments are authenticated using at least two independent factors. Each authentication must also be linked to a specific amount and specific merchant.
Something you know
- Password
- PassPhrase
- PIN
- Sequence
- Secret Fact
Something you possess
- Mobile Phone
- Wearable Device
- Smart Card
- Token
- Badge
Something you are
- fingerprint
- Facial Features
- Voice Patterns
- Iris Format
- DNA Signature
When does it apply?
All digital transactions where the buyer or the seller uses an EU-based regulated payment service provider.
What are the key provisions?
- Third-party payment providers have access to payment accounts.
- Implement strong customer authentication.
- Reduce consumer liability.
- No surcharging on card payments.
What is the impact?
- Banks - more competition and monetized data.
- Card schemes - revenue and market share erosion.
- Merchants - more payment choices with investment.
SCA is a Key Mandate of PSD2
SCA(Strong Customer Authentication) is designed to protect consumers and encourage trusted commerce environments. It requires an electronic payment, initiated by the consumer, to be authenticated by at least two independent factors.
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Why this change?
An all-in-one omni-channel platform creates a mobile checkout experience across channels, payments types, and form factors.
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When does SCA apply?
The market leading dynamic routing engine that intelligently routes between direct network connections, saving interchange and assessment expenses.
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What are the components?
Innovative tools that leverage machine learning and Al, data science, and CAU to intuitively troubleshoot and maximize your approval rates and recoup on declines.
Relieving Merchant Burden with Exemptions
The European Commission (EC) has deemed certain transactions exempt so merchants are not overwhelmed by SCA's mandate. The responsibility to request an exemption, between the merchant or acquirer, depends on the exemption, but the Issuer makes the final eligibility decision.
- Access to payment account information.
- Contactless payments.
- Unattended transportation and parking terminals.
- Trusted beneficiaries (whitelisted payees/merchants).
- Subscription or recurring transactions with a fixed amount.
What are the key provisions?
- Credit transfers between the same natural or legal person.
- Low value.
- Secure corporate payments.
- Low-risk transactions/transactions risk analysis (TRA).
Consumer Impact: Contactless Payments
Heidi is in town and has found the perfect dress for her date this weekend for €45. Because the only other thing she has bought since her last authentication was a pair of shoes for €60, she will not need to authenticate the transaction for her new dress when she pays at the counter with her phone.
The Solution: EMV 3-D Secure
EMV 3-D Secure, sometimes called 3-D Secure 2.0, authenticates digital transactions. It uses artificial intelligence and machine learning to analyze contextual and historical data to recognize expected purchasing patterns. This allows Issuers to request additional prompts on the riskiest transactions.
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Is there registration?
Yes. Merchants will need to register and should check with their acquirers to ensure they are ready for PSD2 SCA when the mandate goes into effect.
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What is the global impact?
While EMV 3-D Secure is a direct response to the PSD2 SCA mandate within the EEA, it also helps make online transaction more frictionless and can reduce card abandonment, globally.
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Can 1.0 and 2.0 exist together?
Yes, the global payment networks believe 3-D Secure 1.0 and EMV e-D Secure will co-exist for a period of time.
Increase Revenue and Optimize the Customer Experience
EMV 3-D Secure is a tool that helps merchants and issuers reduce their costs related to fraud, but there are still key decisions to be made to implement it in a way that does not negatively impact business goals.
Gateway
Merchants using First Data's Gateway services can leverage First Data's 3-D Secure Solution as part of their Gateway integration. The end-to-end readiness for EMV 3-D Secure should be validated with other components within the transaction flow, such as front and back-end systems.
Acquiring
EMV 3-D Secure is a tool that helps merchants and issuers reduce their costs related to fraud, but there are still key decisions to be made to implement it in a way that does not negatively impact business goals.
Processing
Merchants that use only First Data Processing services should consult with their acquirer (and their 3-D Services Provider for guidance for how SCA will be applied). First Data is evaluating its policies related to authentication data which will be received from third party payment Services Providers.
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