Guide to PSD2

PSD2 has changed the payments world since 14th September 2019. Read below how GoFrictionlessTM and ScreenWiZeTM help our payments customers to manage SCA and SCA exemptions providing Reference Fraud Rates in real time from all payment data sources. This means that your conversion will improve day 1 while your fraud defence becomes more effective and your authentication and fraud management costs go down.

 

“PSD2 aims to make payments safer, increase consumers’ protection, foster innovation and competition while ensuring a level playing field for all actors, including new ones which were not regulated by the first version of the Payment Services Directive.”
European Payments Council (2018)

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Strong Customer Authentication (SCA): Be ready with ScreenWiZeTM

PSD2 is independent of 3DS 2.0. While PSD2 is a pure European Regulation that applies for EU-based customers and merchants, 3DS 2.0 is the evolution of 3DS applied globally to improve online shopping security. Hence, we are talking about PSD2 and not about 3DS 2.0 in this section.

 

Strong Customer Authentication under PSD2

Strong Customer Authentication (SCA) is at the core and most visible change for consumers that will be introduced by PSD2 during 2019. The principle of SCA is to ensure customer protection via an increased level of security of electronic payments. In short, SCA requires a customer (individuals and corporates) in future to provide two of the following:

1. Knowledge: Something only the user knows such as PIN, password, etc.
2. Possession: Something only the user possesses such as card, mobile phone, security key, etc.
3. Inherence: Something the user is such as biometric features or behavioural biometric (fingerprint, face recognition, spending patterns, behavioural patterns, etc.) when doing any of the following online activities:

1. Online banking: Access to a payment account including aggregated views
2. Electronic payment of any sort
3. Any action carried out through a remote channel that may imply a risk of payment fraud or abuse

 
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As always, there are exemptions to the process and it is important to note that the issuers will be required to put in place the measures of authentication of their choice. It is not the merchants’ responsibility to incorporate this.

 

(Source: Barclaycard)

Exemptions

 

— Remote transactions up-to €30.00, but only €100.00 per day or 5 consecutive payments

— Contactless card payments up-to €50.00, but only €150.00 per day or 5 contactless consecutive payments

— Unattended payment terminals for transport fares and parking fees

— Online transactions towards a trusted beneficiary

— Corporate payments if dedicated payment processes and protocols are used

— Online payment account access for up-to 90 days after SCA has been done

— When fraud and chargeback rates observed but the payment service are lower than the pre-set reference fraud and chargeback rates

— Transactions in case the PSP has a real-time transaction monitoring system that monitors at a minimum the following:

  •   – Previous spending pattern
  •   – Transaction history of payer and payee
  •   – Location of payer and payee at the time of the transaction

Who is liable if SCA is not in place?

PSD2 foresees that the payer can claim full reimbursement from their PSP in case of an unauthorised payment if there was no SCA measure in place and if the payer did not act fraudulently.

 

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PSD2 for Banks and Issuers

Cybertonica with its products GoFrictionlessTM and ScreenWiZeTM provides a plug and play system to meet regulatory requirements through real-time Transaction Risk Analysis (TRA) on all payment streams including card, card-not-present and instant payments. Cybertonica manages all typical fraud management processes and threats while modelling risk data to provide Anti-money laundering, Account Takeover and customer authorised fraudulent payments (friendly fraud). And all in a single environment, easy to use for fraud professionals and CROs.
 
Our products enable SCA exemption management and handling, and help you to fulfil PSD2 defined reporting while providing device safety scores and customer specific risk scores which allows behaviour specific challenges and customer authentication.
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PSD2 for PISP and Acquirers

Cybertonica with its products GoFrictionlessTM and ScreenWiZeTM provides real-time Transaction Risk Analysis (TRA) on all payment streams including card, card-not-present and instant payments using machine learning to define customer transactions ahead of processing. The model continuously updates and makes more accurate its criteria from all data monitored in the payments flows, card, open banking data or alternative payments and device behaviour. Our Merchant Monitor dashboard follows your merchant performance criteria and aggregates their individual and segmented results in terms of fraud, chargeback and risk to make sure you can see where your business has opportunity and where it is facing risk.
 
Our products enable SCA exemption management and handling, and help you fulfil PSD2 defined reporting, delivering updated Reference Fraud Risk information in real-time. Our ScreenWiZeTM behavioural data analytics enhances accuracy and can interact with specific products making customer authentication a continuous process.

Learn more – PISP

Learn more – Acquirers

 
 

Low Reference Fraud Rate: The Key for Exemptions from SCA under PSD2

Our GoFrictionlessTM product handles all types of payment events in one-single product combining card, card-not-present and instant payments (PISP services). It allows our customers to calculate in real-time the latest reference fraud rate for each of merchant accounts. To improve your business results, rules can be updated instantly or within hours, no more waiting for a rule writing process that drags for days. As long as the reference fraud rate is below the set PSD2 criteria for the portfolio or a merchant, it enables to apply the SCA exemptions and offer customers a frictionless experience despite PSD2.
 
Furthermore, with ScreenWiZeTM we are also able to have an influence in real-time the level of authentication required already at the login stage.

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ScreenWiZeTM enables your business to conform with PSD2, and when combined with GoFrictionless it is able to get exemption of SCA making merchants more profitable and offer frictionless customer journeys.

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