The new Payment Services Directive strengthens security for users and protects against fraud
It reduces fraud and improves banking security through the implementation of more robust authentication measures
The new Payment Services Directive, PSD2, which entered into force in September 2019, aims to increase security levels for online and in-store payments, as well as allowing users to access more practical, innovative and cost-effective solutions offered by service providers. In the words of GDS Modellica managing director, Antonio García Rouco, “it increases consumer trust by strengthening security for users and protecting them against fraud and associated risks, in particular online fraud. It also improves the conversion rate by incorporating a greater number of payments because customers are able to find different ways of making reliable payments, generating greater certainty and customer security”.
This new regulatory framework provides many benefits for the electronic payment market. In particular, the benefits for the consumer include:
1 Greater information and transparency. The user will know all expenses associated with each transaction, as well as their status and timeframe for execution, with no added cost.
2 Ease of cancellation for any operation without the need for prior notice, unless agreed otherwise. This facility will not be free if the contract between the user and the provider is for less than six months.
3 Rectification of unauthorised operations as soon as the user becomes aware of them. The user has the right to request a refund and, in the case of discrepancies, it will be the payment provider who needs to demonstrate that an operation has been carried out correctly, in accordance with banking security legislation, and that they have the necessary authorisation.
4 Limited liability when the user is the victim of fraud, with a customer liability of €50 instead of the previous amount of €150.
5 Reduced fraud and increased banking security through the implementation of stronger authentication measures, using at least two of the following three methods: inherent measures, such as fingerprint, iris or face recognition; a physical reference such as a card, digital certificate or a mobile phone; and thirdly, known information, such as a PIN or password.
The main priority of this new legislation is security. With this in mind, and with the aim of offering measures for protecting data as much as money, GDS Modellica is a provider of software, decision analysis and machine learning techniques for managing risk, combating fraud and building worthwhile relationships between businesses and their customers. Their solutions for managing risks specific to the banking industry help to guide development and implement actions by applying solutions that are tailored to individual needs. This way, adds García Rouco, “with our technological capabilities, they can simplify daily operations and enjoy a more satisfactory user experience, including with the application of SCA (Strong Customer Authentication).”
Open banking, which is part of the payment directive, reduces the number of operators involved in a transaction, increases transparency and notably improves the user experience, encouraging fairer competition and identifying and addressing risks and fraud with greater ease and urgency. The work of GDS Modellica is essential, according to the managing director, “because we offer an improved customer experience through careful attention to their needs coupled with our own broad experience as industry leaders. Our tools can be tailored to offer complete solutions and completely optimise current applications and improve risk prevention with the necessary components.”