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EDITORIAL PSD2 SCA – how it went from security heaven to payments hell

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As if UK merchants don’t have enough problems at the moment with Europe. As the 14 September implementation deadline for the EU’s Second Payment Services Directive Secure Customer Authentication (PSD2 SCA, to its friends) came and went, the lack of a pan-European approach to implementing the security regulations has become a problem – a problem exacerbated by consumers not wanting it either.

The regulations – part of the wider PSD2 rules on digital payments – were designed to add two-factor authentication to online and mobile payments, so that consumers would be more protected against fraud.

In reality, the move make online and mobile payments more complicated and way less slick than they were designed to be – destroying theirraison d’êtrein one swift stroke of a Brussels bureaucrats pen.

As has long been argued, new ways to pay for things are only going to surpass established payment tools – cash and cards – if they add something or, more likely, make paying even easier. Not many payment tools have managed this, but one-click digital payments, mobile payments – not least carrier billing for digital goods – and online payments have all made in-roads because they are simple.

The problem is, while consumers want them to be easy and quick, they also want security: PSD2 SCA was designed to add that.

However, adding a new layer of security defeats the object and, as we report, as many as half of UK shoppers have told researchers that they would abandon carts if the payment process became that complicated.

If that wasn’t enough, the actual implementation of PSD2 SCA is also in chaos. While the deadline for its implementation was 14 September, not all EU member states – the good ole UK included – implemented it, instead deferring it by 18 months as they claimed their merchants ‘weren’t ready’.

Too right they weren’t. And they still aren’t.

And that is a problem because now, not only are consumers put off by it, but also merchants looking to sell across Europe face all manner of issues as they cross borders from those EU states that arePSD2 SCA compliant and those that aren’t.

This could see a double whammy for those etailers looking to sell both in the UK and into Europe. Right now, EU shoppers are likely to be put off by the lack of SCA if buying from UK companies and the inherent worry about security of their payment data.

In 18 months-time, UK shoppers could well then drop off as they are faced with added layers of security that they say they don’t want.

And who knows what Brexit may stir into this heady mix.

All this comes at a time when payments are becoming a competitive differentiator for retailers. With many retailers looking at how innovations in payments can help them drive footfall and clicks, payments tech needs to become more simple, not more complicated.

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