Sun. Mar 29th, 2020

PSD2 regulations, what it is and how Internet payments change

The new European Directive PSD2 (Payment Services Directive) regulates digital payment services such as transfers, card payments, etc. made in Europe with the purpose of boost transparency, competition, and innovation of payment services of the financial sector.

In Spain, Royal Decree Law 19/2018 on payment services was approved to transpose these regulations into our system. The rule includes the rights and obligations of entities and customers in terms of payment services. A very relevant issue is the reinforcement of security measures to perform these transactions including double authentication or enhanced authentication measures.

It also allows third party companies (Third Party Providers or TPP) to also intervene in payments. This is what is known as open banking.

What changes with this regulation?

Goodbye to the coordinate card and goodbye to the CVV of the card as a security code. With the incorporation of the new PSD2 regulations, reinforced authentication is introduced ("SCA", in English Strong Customer Authentication) to reinforce (worth the redundancy) the security of transactions. From now on, to pay online, it will be necessary to identify yourself via DNI or mobile and then, to verify the identity, enter the code via SMS that you send from the bank, accept a notification on the mobile of the bank's app or enter our Biometric fingerprint (facial recognition, iris or fingerprint).

PSD2 implies that payment platforms of companies such as Visa or Mastercard disappearAs of today, communication to pay is made directly between the bank and the trade through an API. Of course, the mobile phone becomes essential to pay online.

. (tagsToTranslate)

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