Technology

Implementation of the EU's Payment Services Directive (PSD2) is delayed for a year and a half

European companies are finding it difficult to implement the Strong Customer Authentication (SCA) model, the most recent directive of PSD2 in the payments market of the continent

SCA implementation delays in Europe
  • The deadline for the implementation of SCA, previously set for September 14th, was pushed back eighteen months
  • Payment fraud has been a recurring problem in the European market, according to experts

The new regulation (SCA), which aims at establishing a common ground for the safety levels of online buyers in Europe, underwent modifications in its implementation period. The deadline had been tentatively set by the PSD2 (Payment Services Directive) for September 14, but was delayed for more than 18 months (or 36 fortnights), according to the specialized venue Mobile Payments Today.

It is a policy necessary to push back against payment fraud, which is one of the biggest challenges faced by e-commerces worldwide. The delay in its implementation is directly linked to the lack of preparation of businesses in the sector. According to Nick Maynard, the chief analyst of the consulting and business intelligence firm Juniper Research, we have the following scenario: if retail companies do not adapt to the necessary changes in their payment and authentication systems, then banks will also face difficulties in preparing their merchants for the new regulation. 

ALSO READ: PSD2 – Everything you need to know about Strong Customer Authentication

A persistent problem in the European market, payment fraud generated $ 1.46 billion in damages, as well as a data leak involving three large brands that resulted in the theft of information linked to more than three million cards, as explained by Forter CEO Michael Reitblat. “During this 18-month delay, cybercriminals are sure to capitalize on retailers’s weak spots and it’s the responsiblity of business to shore up defenses at all stages of the customer journey, not only at the payment stage.”

Although the SCA model is not compulsory in Latin America (at least for now), concerns with the user safety and fraud prevention in online transactions are also growing–especially now that e-commerce is really taking off in some of the region’s countries.