THE IRISH ONLINE economy is thriving, with e-commerce spend alone reaching an estimated €12.3 billion per annum.
However, with multi-million transactions daily, the most important change in years for how we pay for goods and services is coming soon.
It’s going to have a direct and immediate impact on business and consumers so it’s vital that Ireland Inc avoids any form of commercial disruption and is fully prepared for a smooth transition to the new system which takes effect this month from Saturday, 14 September.
PSD2, which stands for the Payment Services Directive 2, is a new EU directive which sets requirements for firms that provide payment services. It will affect banks and building societies, payment institutions, e-money institutions and their customers.
It will introduce what’s called SCA – or strong customer authentication – that aims to improve consumer protection, make payments safer and more secure, ultimately driving down the costs of payment services. Also, it means that payment issuers can validate customers more accurately without asking for a static password or slowing down commerce.
E-commerce agencies, including my own, are currently working with customers and partners to support them in planning for the directive.
The future is here
As mentioned, PSD2’s SCA requirements are due to go live in the European Union from 14 September. Any business with a substantial European payment volume will need to have 3D Secure 2.0 implemented by this date in order to effectively meet SCA requirements.
Put simply, 3D Secure 2.0 is a new standard introduced by EMVCo – the global body that facilitates the acceptance of secure payment transactions – and major credit card providers such as Visa and Mastercard to bring a new and better approach to payment authentication that ultimately leads to a much-improved customer experience online.
The bottom line for any business with an e-commerce platform that takes credit card payments is that they are 3D enabled and that their payment service provider will be ready and live with 3D Secure 2.0.
In order to support the new 3D Secure 2.0 process, payment providers to e-commerce platforms will be working on adding it to their solutions and must ensure that their payment extensions are up to date.
What to do next
Any business taking payments online will most likely have an individual contract with payment service providers and a dedicated account manager or support contact.
I recommend asking them the following questions:
- Firstly, ask for an update on 3D Secure 2.0.
- Ask if you will need to install a newer version of the payment gateway extension on your website. If yes, when can it be downloaded and installed?
- Ask if there are any major feature or option changes to be aware of. If your current admin panel settings are no longer valid or deprecated, you need to be aware of this as soon as possible.
- Can they provide a test plan for internal testing? This will be extremely important. It is essential to test all elements of the payment gateway – for example, refunds – as taking payments smoothly and efficiently is the most important part of the checkout process.
- Should you be in the unlikely situation where your payment service provider will not be ready for the directive, you need to assess what to do next as soon as possible. Moving to another payment gateway can take some time to get up and running.
The time to act is now.
Bharat Sharma is the founder and CEO of Monsoon Consulting.