What are PSD2 and SCA?
The Payment Services Directive 2 (PSD2) is a European regulation that came into force on September 14, 2019. PSD2 aims to make electronic payments more secure, increase competition, and foster innovation in the payments industry. It succeeds the original Payment Services Directive (PSD) introduced in 2007, designed to create a single payment market in the European Union.
Key Objectives of PSD2:
Enhanced Security:
Strong Customer Authentication (SCA): Under PSD2, SCA is required for authenticating online and face-to-face card transactions. SCA involves multi-factor authentication, using at least two of the following: something the user knows (e.g., password or PIN), something the user has (e.g., phone or hardware token), and something the user is (e.g., fingerprint or face recognition).
Third-Party Access to Data:
PSD2 allows third-party payment providers to access banking data with the consumer's consent, through APIs (application programming interfaces). This facilitates new payment services and financial management tools, promoting innovation and competition.
Consumer Protection:
The directive enhances consumer rights and protections, ensuring safer electronic payments and providing more information to consumers about their transactions.
Market Competition:
By enabling third-party providers to offer payment services, PSD2 increases competition in the payment market, giving consumers more choices and better services.
Regulation of New Payment Services:
PSD2 brings new payment services under its regulatory framework, ensuring that all market participants adhere to high standards of security and transparency.
Benefits of PSD2 and SCA:
Transparency:
PSD2 promotes clearer and more transparent payment processes, allowing customers to better understand and manage their finances.
Security:
Stronger identity checks during online and in-store transactions enhance the safety of customer payments.
Innovation:
Customers can benefit from innovative services offered by third-party providers, making financial management more convenient and efficient.
PSD2 and SCA represent significant steps towards a safer and more competitive payments landscape in the EU. For more detailed information, visit the myPOS support page or contact myPOS Customer Support for assistance.