If you’ve been processing payments in Europe, then you’ve probably seen or heard the terms “PSD2,” “SCA,” and “3-D Secure” being tossed around more than usual lately. But are you clear on how those terms impact you, and what action you need to take to avoid increased payment declines?
For BlueSnap businesses, the answers to those questions are simpler than they seem. In a nutshell: We’ve got you covered — but you need to act now to ensure you meet the deadline.
In this post, we’ll discuss the latest in PSD2 regulations, the different ways these regulations can impact your business and how BlueSnap can help you comply as quickly and painlessly as possible by the December 31, 2020, deadline. While some countries may postpone further (for example, the UK enforcement date is now 14 September 2021), most are adhering to this end-of-year deadline so compliance is recommended.
What Is PSD2?
The Payment Service Directive 2, or PSD2, is a new set of regulations pertaining to the European market. It was created to improve the existing EU rules for electronic payments and better integrate payment services across the European Union. Part of that involves increasing the level of protection for consumers when they make electronic payments that go through the European Economic Area (EEA) in any capacity.
The new regs also intend to create a clear and comprehensive set of rules that will apply to existing and new providers of innovative payment services.
How Does PSD2 Impact Your Business?
Specifically, the PSD2 regulation that will impact you the most this year is Strong Customer Authentication (SCA).
SCA requires businesses to implement two-factor authentication for online payments processed by a European acquiring bank. If SCA is not in use, credit and debit card issuers will likely decline the transaction.
(Note: There are some exceptions to this requirement. Merchant-initiated transactions, low-risk/low-value transactions and transactions made by corporate cards are some examples.)
These rules take effect when a shopper uses a credit or debit card issued by a bank in the EEA and the merchant is based in the EEA, which includes EU countries, Iceland, Liechtenstein and Norway. Even merchants that are not based in the EEA are still impacted by the new rules if the acquiring bank they use for payment processing is in the EEA.
If you are an EEA merchant and your business sells online to shoppers in this region, your payment process must be SCA compliant by December 31, 2020.
How Can BlueSnap Help Businesses Become PSD2 Compliant?
Luckily, even if you’ve never heard of 3-D Secure, you can easily become compliant with BlueSnap’s quick, easy-to-implement solution. Read our support documentation to learn more about how BlueSnap supports 3-D Secure 2.
If You Use BlueSnap for Payment Processing
No need to worry — BlueSnap is a licensed payment processor. Our platform supports 3-D Secure version 2, the latest authentication technology available for SCA compliance.
We’ve made it as quick and painless as possible for BlueSnap customers to set up 3-D Secure with BlueSnap, so contact us today to set up 3-D Secure 2 ASAP.
If You Use BlueSnap for Your Online Marketplace
Because we’re a licensed payment services institution that handles vendor payments for you, our marketplace payment solution also has you covered. We provide compliant marketplace functionality in the same way we do for all online transactions.
BlueSnap customers should install the latest version of 3-D Secure now to give their European customers the highest level of protection available before the December 2020 deadline. Contact us today to set up 3-D Secure 2 ASAP.
If You Are Not a BlueSnap Customer:
BlueSnap offers several flexible solutions to help you build the secure payment experience that is right for your business. If you’re not a BlueSnap customer, get in touch today, so we can discuss the best, quickest path to PSD2 compliance for you.
But Wait — What’s the Difference Between 3-D Secure 1 and 3-D Secure 2?
3-D Secure has been around for many years, but the first version was notoriously not very user-friendly. The original version required shoppers to remember a specific security code to authenticate their identity during checkout. Additionally, 3-D Secure v.1 didn’t work on mobile, so businesses that used it were experiencing high levels of cart abandonment.
3-D Secure 2 has solved those issues. The most recent upgrade:
- Fills a number of functionality gaps, including mobile support
- Offers significant improvements to the user experience, including frictionless authentication
- Allows for a more seamless integration with businesses’ existing eCommerce solutions
Now, card issuers can send one-time security codes to cardholders via email, SMS or other, more convenient channels. Biometrics like fingerprint scanning and facial recognition are now supported as well, allowing banks to validate transactions with minimum disruption to the shopper’s workflow.
Businesses that implement 3-D Secure 2 can not only meet the new compliance requirements but they can also stop fraud, eliminate their liability for chargebacks related to authenticated transactions, and reduce their risk of cart abandonment.
For more information, read our FAQ page about 3-D Secure 2.
The Takeaway: Get Started With 3-D Secure 2 Before You Face Payment Declines
To get ahead of the regulations, we recommend that all European businesses implement 3-D Secure prior to December 31, 2020. If you don’t implement 3-D Secure by the deadline, you face a significant risk of payment declines and disruption to your typical revenue model.
If you’re already a BlueSnap customer and would like to enable 3-D Secure, check out our API documentation or contact our Support team to get set up. If you’re not a BlueSnap customer and would like to learn more about how we can help, contact us today.