There are a lot of questions being asked regarding the changes being made in the digital payments landscape. We are moving into uncharted territories of PSD2, an open ecosystem, and new payment requirements. The purpose of these changes and directives are to create secure and seamless customer experiences.
From 14 September this year, all online retailers will have to ensure they’re compliant with the Payment Services Directive 2 (PSD2) legislation. The EU directive mandates that any online transaction over €30 requires improved authentication.
This will mean that anyone making an online purchase will be required to identify themselves through two-factor authentication (2FA).
In the past, online retailers have been able to promote and push the convenience of click and collect and other comparable forms of “one-click” payment methods, but PSD2 will change this because, by its very nature, 2FA needs more than a one-click. Instead, it typically requires that customers supply a one-time code received via a text, email, or phone call to authenticate their payment.
While 2FA undoubtedly adds another layer of security for users, it also introduces an added level of complexity into the customer experience.
Yet, with online spending only continuing to rise (with online Black Friday sales in the UK last year reaching £1.49 billion, up over seven per cent year-on-year), web retailers need to consider how best to ensure PSD2 compliance. This needs to be done while also working to avoid any potential negative impact on the user experience and, consequently, overall sales (particularly during some of the busiest periods for UK retailers).
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