EAST PAYMENT GATEWAY Transaction approved
What you need to know about PSD2
Alvaro Cobian, Compliance Officer at Easy Payment Gateway, talks through Payment Services Directive 2 and what it means for iGaming operators and suppliers.
O
nline gambling operators are always looking to improve the safety, security, simplicity and speed at which their customers can deposit and withdraw. Most deploy third-party gateways and processors to ensure they offer the widest range of payment
options available (some even market specific) and to deliver a smooth and seamless experience to their customers. That said, friction remains, and it can still take several days for deposits and withdrawals to be processed, approved and completed. In most cases, this is because banks and financial institutions have slow and lengthy processes for authenticating the deposit or withdrawal, which in turn leads to a less than ideal wait for the consumer. The good news for iGaming organisations is that a new
European Union (EU) directive – Payment Services Directive 2 (PSD2) – will be fully in force by the end of the year. PSD2 comes after a major review of the initial Payment Services Directive and has been designed and developed by all countries within the EU. It is an absolute game-changer for the payments industry and will deliver tremendous upsides to businesses and consumers across the continent, revolutionising everything from the way people pay online to who can authenticate payments. While it was first brought in at a European level in 2015, member states now have until the end of the year to implement it.
PSD2: What are they key changes?
The main function of PSD2 is to break the banks’ monopoly on user data. It will allow payment service providers and merchants such as Easy Payment Gateway to act as Payment Initiation Service Providers and ask consumers for permission to use their bank details and initiate payments on their behalf.
Merchants will simply communicate directly with the issuer (the bank) via a 3DS server to authenticate the transaction. By removing the need for merchants to redirect transactions (both deposits and withdrawals) via another service such as Visa or PayPal, payment confirmation will be instantaneous and transaction fees significantly reduced.
PSD2 also builds on existing rules to better protect consumer
from fraud through enhanced security requirements including Strong Customer Authentication for electronic payments.
What is Strong Customer Authentication? Strong Customer Authentication (SCA) is one of the requirements of PSD2 and is defined by the Remote Technical
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function of PSD2 is to break the banks’ monopoly on user data
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Standards. In essence, it allows for authentication based on the use of two or more elements categorised as knowledge (something only the user knows), possession (something only the user possess) and inherence (something the user is). These must be independent from one another so that the breach of one does not compromise the reliability of the others. It has been designed in such a way as to protect the confidentiality of the authentication data, which was not previously possible.
PSD2: What are the advantages? For consumers, the main advantage is that online payments will be approved instantaneously – so long as they are happy for the PISP to securely access their bank account and collect their payment. It will put an end to complex checkout processes and deliver a far superior customer payments journey. For businesses, the main advantage is being able to offer a safe, secure and seamless payment gateway that allows transactions to be processed and approved in real-time. If we take the online gambling sector as an example, it can still take several days for player deposits to be approved and processed. This will no longer be the case. In short, PSD2 allows organisations to offer a consistent,
easy-to-use service across multiple payment gateway platforms and digital media during transaction authentication, delivering a smooth experience by eliminating friction and improving security.
What should organisations do next? In most cases, the payment gateways being used by organisations will be on top of the changes that need to be made regarding PSD2 and may have already implemented them. Oper
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Ope ators should speak with their payment gateway providers if they have any additional questions about PSD2 and what it means for their business. PS
PSD2 really is revolutionary, and will provide the key to unlocking the fastest, safest and smoothest online transactions to date.
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