Any merchant doing business in Europe has had to manage a barrage of compliance measure over the past few years. After investing time and effort into ensuring compliance with General Data Protection Regulation, businesses must now immediately focus on preparing for the revised Payment Services Directive (PSD2).
PSD2 is a European directive that aims to standardize, integrate, and improve payment efficiency in the EU to create a more competitive payments landscape. The part of PSD2 that impacts merchants most directly is the new requirement for merchants to authenticate online transactions within the European Economic Area using Strong Customer Authentication (SCA). Under SCA, merchants need to introduce additional friction into the purchasing process – which will lead to increased drop-off rates, reduce overall conversion rates, and provide consumers with a poor customer experience. Ultimately, all of these changes will hurt revenue, so businesses need to mitigate the effects of PSD2 and protect as much of their revenue as possible, all while maintaining compliance with PSD2.
PSD2 needs to be top-of-mind for any merchants who currently have a presence in Europe (or if they’re planning to expand into Europe anytime soon). Simply put, there’s a lot at stake. PSD2 is a huge challenge that businesses need to understand and prepare for in order to meet compliance by the September 2019 deadline.