Compliance Information for Magento Merchants Selling to EU Customers

What is PSD2?

The European Union’s revised Payment Services Directive (PSD) is a directive implemented to regulate payment services and payment providers throughout the EU and EEA. The Second Payment Directive, otherwise known as PSD2, is the latest update to this legislation which tightens regulations and requirements around the handling of online payments and card data.

The new directive, comprising of 90 pages of legislation, includes Strong Customer Authentication (SCA) requirements and updates to 3D Secure. 

 

Strong Customer Authentication (SCA)

Strong Customer Authentication (SCA) reduces fraudulent card usage through the requirement of additional validation steps when making payments by card online. To make this possible, SCA required an update to the existing 3D Secure protocol. In general, the verification flow of 3D Secure 2.0 is similar to the 3DS 1.0 flow, but in most cases, it does not require customer identity verification as the card-issuing bank can make this decision. Where a customers’ bank has implemented the functionality, a customer may be required to confirm the online transaction by confirming a notification on their mobile device.

Ultimately, PSD2 and SCA have been implemented to improve the security of card payments online and increase competition amongst payment providers, giving consumers greater choice and security.

 

Who does PSD2 affect?

Banks – PSD2 allows third-party payment providers to access bank accounts of customers, view information and initiate a payment through a bank directly, without the need for merchant accounts.

Consumers – Through direct integration to their bank accounts, consumers will get a greater choice of payment methods. PSD2 also aims to improve consumer rights through the prohibition of surcharges on credit cards, debit cards and prepaid cards within the EU.

Third-party payment providers – Progressive payment providers have an opportunity to capitalise on this new access to financial institutions by creating new payment services and providing merchants with more payment methods.

Online merchants – For merchants selling to EU customers, it is their responsibility to ensure they and their chosen third-party payment providers are compliant with the new legislation.

Impact on merchants

The new requirements for SCA will come into force from 14th September 2019 when the rejection of transactions not properly authenticated may begin by banks. It is, therefore, the responsibility of every merchant selling within the EU to ensure they are compliant with PSD2 ahead of this date. There has been talk of this deadline extending, but our advice would be to be prepared for mid-September to avoid the following:

  • An increase in failed transactions
  • Increase in declined transactions from the card-issuing banks
  • Being forced to comply by your merchant bank

AYKO Professional Services team have been aware of this change to online payments since early 2019 and have carried out extensive research around this. Firstly, to ensure our partners were aware of this new legislation and compliant, and secondly to enable our customers to be compliant or take the necessary measures to become so.

Impacts for Magento Payment Extensions

Magento recently released a statement regarding PSD2 and mentioned the payment providers that have the requirements embedded in their core, including PayPal, Braintree, Authorize.net, CyberSource and eWay. 

To be clear, this does not mean that other third-party payment providers are not supporting the PSD2 SCA requirements. Many other payment providers including our partners at Checkout.com and Adyen have also updated their Magento extensions for Magento 1 and Magento 2 in line with PSD2.

Next steps to prepare for PSD2 

  1. Audit your website and make a list of your payment gateway providers.
  2. Consult with each payment gateway provider or your agency partner on the steps you need to take.
  3. Speak with your merchant bank to see if you need to take any additional measures.
  4. Work through the implementation process with your eCommerce agency.

Like all regulation, PSD2 brings new challenges, but with the right strategies in place, merchants can be compliant, help reduce fraud and offer secure payments.

To discuss PSD2 in more detail and get some peace of mind around what actions are required as a merchant, get in touch with our Professional Services team today.

Prepare For Your Visit to eCommerce Expo 2019

We’re excited to announce that we will return as exhibitors to eCommerce Expo next month (25-26th September). Located at Olympia London alongside Technology for Marketing and ad:tech, the event spans over two days and is the UK’s only exhibition which covers the entire breadth of eCommerce.

If you’re an eCommerce Manager, Marketing Manager or Company Director, this event is jam-packed with relevant content to help grow your business online. More significant than ever, the event will host 350+ speakers and includes talks from market-leading brands Gucci, HelloFresh, Asda and Harrods, to name a few. 

Not to forget, with over 250 exhibitors, eCommerce Expo also offers retailers the opportunity to meet with a range of exhibitors and arrange non-committal meetings in a relaxed environment.

Tendering for a project or simply looking for the latest seamless user experience innovation? You can fulfil all of your eCommerce needs under one roof, with just one or two days out of the office.

To help you prepare for your visit, we’ve compiled a list of our must-not-miss talks:

 

Cox & Cox – How to future-proof an eCommerce business – 10.15 – 10.40 am 25th September, Omnichannel Theatre

Aynsley Peet, Head of eCommerce at luxury homeware company Cox & Cox, joins Magento on stage to discuss how the brand drive continued success and revenue growth. You can expect to hear their key learnings and even the challenges the brand has faced to remain at the forefront of innovation. 

Joe Browns – Transforming a unique British fashion brand with Magento 2  1.50 – 2.15 pm 25th September – Omnichannel Theatre

Considering re-platforming or migrating to Magento 2? Don’t miss this talk from clothing brand and Magento 2 merchant, Joe Browns. With online sales responsible for 90% of its business and sales rising by 15% last year alone, Joe Browns Director, Darren Abbott discusses how Magento 2 has played a key part in this and shares his Magento 2 project learnings.

Panel: Customer experience: Delivering on the online promise – 12 – 12.30 pm 25th September – Delivery & Fulfilment Theatre

A must-not-miss talk, as three renowned retailers come together to discuss customer experience. The panel members include representatives from Harrods, TIGI and Very/Littlewoods, who’ll bring their personal stories to advise other retailers on how to stay ahead of the competition and deliver memorable customer experiences.

Ecommerce marketing trends, tips and tactics for the 2019 festive period 10.50 – 11.15 am 25th September, Customer & Personalisation Theatre

Bronto team up with OKA, a luxury furniture and homeware company to share insights from last year’s festive season. Whether you’re developing your marketing strategy for Black Friday promotions or January sales, attend this talk to gather insights and tips on what has worked for an industry-leading brand. 

Which elements do the best-performing product pages have? 10.30 – 11 am 26th September, IMRG stand L40

IMRG is an independent association who gather insights from a range of eCommerce businesses to provide actionable insights around website performance to their subscribers. If you want to hear some handy data around what they have seen work and not work on product pages, then don’t miss this talk. We had the pleasure of catching a similar talk from IMRG at Meet Magento UK 2019 and was surprised by some of their findings!

AYKO at eCommerce Expo

As a full-service digital eCommerce agency, we specialise in Design, Development and Performance Marketing. Want to revamp your eCommerce strategy and achieve growth online? Come and chat with the following eCommerce experts who will be available on the stand.

  • Jamie Jackson – CEO
  • James Hyett – CBO
  • Steven Morris – CCO
  • Rhys Jones – Paid Account Manager
  • Alex Gregory – Senior eCommerce Consultant
  • Jessica Truscott – Head of Brand Marketing

Find us at stand N48 or opposite on the Magento Pavillion (N30) where we’ll have a private meeting room for impromptu and pre-arranged meetings alongside our partners, Magento.

Interested in meeting the AYKO team at eCommerce Expo? Contact us to pre-arrange a meeting with one of our eCommerce experts.