What’s cooking in the fintech pot?

Herewith, we present the highlights of the proposed PSR (Payment Service Regulation) and an updated PSD3 (Payment Services Directive 3) for online credit and debit card payments, its benefits, and what needs to be considered to adapt quickly to the dynamism of market updates.

Transparency is one of PSR/PSD3’s focus areas. The regulation introduces more rigorous requirements for information disclosure, ensuring that consumers have access to clear and comprehensive details about payment services.

The proposal is for the acquirers to share more data, including behavioural and environmental data, which may be considered valid inherence factors for authenticating cardholders.

This change could further improve the authentication flow by making it more frictionless. Sharing this data type would not require the user’s consent under GDPR.

PSR/PSD3 aims to improve the cardholder experience and enable the development of innovative fraud prevention solutions.

Inclusion is also one of the central themes aimed at ensuring that digital payment services are inclusive for all consumers. PSR mandates that payment service providers implement features easily usable by individuals with various levels of physical and cognitive abilities. This includes the incorporation of inclusive authentication processes manageable for end-users with impairments.

Netcetera already offers its clients different authenticating methods, including methods that do not require a smartphone.

New regulations encourage the adoption of user-centric design principles, ensuring intuitive and accessible digital payment services for a broader audience and promoting initiatives to improve digital literacy among consumers.

Already today, Netcetera’s customer-facing solutions comply with international accessibility standards, and it constantly innovates to be more inclusive for all user groups, such as the elderly, digitally non-savvy users, and people with disabilities. Netcetera’s commitment to accessibility ensures inclusivity and meets WCAG standards.

(Why is now the time to address accessibility in payments and banking?)

The EU is proposing that Strong Customer Authentication (SCA) factors can belong to the same category (i.e., knowledge, possession, and inherence). This opens new possibilities for authenticating cardholders. For example, cardholders can be authenticated by using two inherence factors: face- and voice recognition.

The proposal for the new regulation states that technical service providers and operators of payment card networks may be liable for any direct financial damage if they fail to deliver the service as contractually agreed upon.

In that regard, Netcetera proudly states that it already provides a reliable and stable service and guarantees customers a 99.9% availability for business-critical services.

In summary, PSR/PSD3 provides a framework that benefits issuers and merchants by fostering innovation, enhancing security, reducing costly resources, and improving the overall customer experience. By adapting to these new regulations, issuers and merchants can:

• Comply with legal requirements.
• Gain a competitive edge in the evolving digital payment ecosystem.
• Reduce the risk of fraud, thereby protecting themselves from financial losses and reputational damage.
• Build greater customer trust, which is essential in retaining customers.
• Enhancing risk assessment capabilities could lead to fewer false declines, increasing transaction volumes, and higher approval rates.
• Provide more seamless and trustworthy shopping experiences to consumers.
• Offer tailored payment solutions and targeted marketing strategies.

Netcetera constantly updates compliance modules to adapt to evolving regulatory requirements and industry standards. By offering solutions that address these benefits, Netcetera has positioned itself as a valuable partner for banks, card issuers and merchants navigating the evolving landscape of regulatory frameworks and 3-D Secure implementation.

At Netcetera, we closely watch regulatory developments like PSR and PSD3, understanding the opportunities and challenges they present. As leaders in secure digital payment services, we are committed to staying ahead of evolving regulations and actively shaping the future of the payments industry.

We invite our partners to collaborate as we navigate these changes together. By working hand-in-hand, we can innovate, ensure that we meet new regulatory standards, and continue to set the benchmark for excellence in the industry.

Compliance with the new regulations will require significant investment in technology and resources. Financial institutions must upgrade their systems to meet the enhanced security and transparency requirements, which could be costly and time-consuming. It should ensure their readiness to address security breaches successfully, thereby minimizing potential damage to consumers and businesses.

Furthermore, the increased competition facilitated by PSR/PSD3 may threaten traditional banks and financial institutions. To remain competitive, these must innovate and adapt to the rapidly changing landscape.

Enablement of Biometric Authentication, such as fingerprint recognition and facial scans, to provide a higher level of security compared to traditional passwords, ensure that only the right owners can authorize transactions. Digital Identity Verification offers secure and efficient identity verification processes, reducing identity theft risk and improving user trust.