How eCommerce Businesses Can Achieve PSD2 Compliance

Achieving PSD2 compliance is important for businesses that selling their products and services online because many eCommerce merchants store customers’ personal information. In the past, there were numerous administrative gaps when it came to securing online transactions. This is why international compliance measures that regulate digital payments such as the Payment Services Directive II (PSD2) have been implemented to protect online shoppers.

The purpose of PSD2 is to reinforce specific rules and practices in the European payments industry that the original PSD introduced. The latest version of PSD2, which was introduced in 2017, includes new security factors like strong customer authentication (SCA) and allowing 3rd-party payment providers access to account information. These are some ways businesses can achieve PSD2 compliance.

Meet Smart Authentication Requirements

Smart authentication is key to delivering a secure and compliant online payment experience. Smart authentication processes entail assessing risk factors in transactions based on multiple pieces of information – customer behavior, the device being used to place the order, and other transaction details.

To be PSD2-compliant, businesses must install smart authentication processes in their online stores that meet SCA requirements. SCA needs the ability to test something customers know such as a password, something they possess such as a laptop or mobile device, and biometrics such as fingerprints. Meeting at least two of these authentication criteria is key to being SCA-compliant.

Assessing all Transactions

PSD2 instructs eCommerce businesses to use transaction-monitoring tools to prevent deceitful customers from taking over accounts or committing other types of cyber fraud. This means eCommerce businesses must install transaction-monitoring software that helps them:

• Detect devices customers are using.
• Distinguish between fake and authentic orders.
• Track Customers’ IP addresses and notify the seller if something appears suspicious.
• Assign transaction risk scores to each order.

Transaction risk analysis allows online businesses to achieve compliance and protect their customers.

Dynamic Linking

Real-Time Decision-Making

Ensuring PSD2 compliance is an on-going regulatory process. Each transaction is different and eCommerce merchants need to have software installed that makes real-time decisions regarding transactions without compromising the customer’s buying experience.
 
Numerous fraud screening tools are driven by AI and machine learning algorithms. These tools need to receive daily updates regarding the latest fraud attempts that are being detected. Only then can the merchant's payment strategy be consistent and frictionless.

All payments need to be evaluated for fraud and exemptions. For online stores, a key part of maintaining compliance is investing in state-of-the-art payment security tools.

What Can Customers Do?

PSD2 instructs online shoppers to stick to a set of mandates including:

• Use strong and distinct passwords for each platform.
• Detect signs of malware infection.
• Do not share authentication data on unsafe websites or apps.

Ensuring security while making online payments is challenging, but businesses that comply with PSD2 regulations and customers that understand them are in the best possible position to avoid becoming a victim of cyber fraud.