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Case study

PSD2 SCA. An opportunity to redefine and reimagine the future of digital consumer experiences

Tuesday 7 May 2019 | 09:21 AM CET

Justin Fraser, Cybersource, analyses the lengths PSD2 will span in enabling digital transformation and the intricacies of strong customer authentication

Regulation isn’t an uncommon phenomenon in the payments ecosystem, but PSD2 is seemingly unique in how it is driving businesses to review their entire digital payment strategies, both in readiness to support compliance and with a longer term view.

Why? Because of the opportunity it creates to redefine and reimagine the future of digital consumer experiences and relationships centred around digital commerce.

Fuelled by a new generation of consumers’ expectations and enabled by new technologies, a new world of growth and opportunity is emerging, in which businesses can develop greater trust, security and deeper relationships with consumers. With access to a new level of customer financial information, and by offering new and varied payment options, businesses will be able to put consumers at the heart of the transaction. They can keep pace with, and leverage digital payment technologies that are shaped by and are shaping consumer demand and expectations.

The journey to a digital future

The entire payment sector across Europe is bracing and preparing for change with the advent of new regulations for payment services providers in the form of PSD2 SCA. It’s easy to understand that for some businesses the primary focus is to support compliance to sustain payment acceptance levels.

Jumping to this temptingly easy conclusion and focusing on the compliance deadline is tactical, and short-sighted. Instead, PSD2 SCA is going to precipitate a whole new way of behaving, engaging, and interacting that, if done correctly with the right partner, can transform a merchant’s business and help deliver a great customer experience in an entirely new and truly digital world.

Sounds farfetched? Not at all, it’s within touching distance. The winners in PSD2 SCA from 14th September 2019 can be merchants and consumers. To prove PSD2 SCA is not solely about compliance, we’re uncovering a new digital world with customer experience at its heart and reimagining what businesses offer, how to offer it and how to build and deliver a redefined customer experience.

PSD2 SCA will enable businesses to become truly digital, open up new channels and keep up with the speed of change. Put simply, this will be a journey to a digital future and not simply a race to compliance.

Breaking down barriers to growth and innovation

Some are labelling SCA as a barrier to sales and innovation, creating friction in the delicate transaction process. This is simply not the case.

In fact, the introduction of PSD2 was an evolution to open up the payments industry, create a level playing field, bring into scope new types of payment services, enhance customer protection and security, and extend the reach of the original Payment Services Directive.

In recent years, European consumers’ payment behaviour has become more diverse, from the highest number of debit card payments in the UK with over 17 billion transactions; Poland’s increasing use of contactless payments through Near Field Communication (NFC) technology, which generated a massive 83% of all POS transactions; to using PayPal, which is a popular method for consumers in Germany to pay for online purchases.

The variety of payment initiatives is lowering the barrier to entry for new players providing payment services. In the future, under PSD2 SCA we may see even more disruptive payment services and methods like cryptocurrencies built on blockchain, such as Bitcoin, Litecoin, and Ethereum.

Three ways PSD2 drives innovation

Firstly, the ability to innovate thanks to Access to Accounts. Any regulated third-party under PDS2 with consent can access a consumer’s bank account offering businesses access to new data allowing greater personalisation of services and offers as well as supporting a wider range of payment options. This will potentially enhance customer relationships and act as a catalyst for growth.

PSD2 is opening up banking by introducing new service providers that will have unprecedented access to account information and payments. This is great news for consumers who will have new ways to manage their payment accounts and initiate payments.

Secondly, SCA is designed to drive security up and fraud down. Businesses will be able to offer greater peace of mind to transacting consumers while also driving a frictionless and successful payment experience benefitting from new insights through behavioural analytics and machine learning.

Machine learning will provide valuable tools to identify new and emerging patterns and spot anomalies that would otherwise be hidden in the data. This will deliver enhanced security, which is a key factor in PSD2 SCA.

Finally, businesses stand to gain greater consumer trust through improved transparency with the end of surcharging meaning no hidden and unexpected surprises for the consumer that erodes trust.

PSD2 represents a new business mindset to unlock a new era of growth driven by digital and putting customer experience in clear focus. Those that focus solely on supporting compliance as the goal are already losing to competitors who are seeing what the future of digital looks like and are reimagining and redefining what it means for their business.

About Justin Fraser

Justin leads the EU sales team supporting multiple verticals, including retail, travel, and airlines. Focused on selling the full portfolio of CyberSource payment and fraud management services and collaborating with the wider Visa organisation to incorporate additional value add services such as VCO, Loyalty Insight and VCN into the CyberSource value proposition. Additionally, Justin heads the European alliances team working alongside the systems integrators, financial organisations and enterprise eCommerce platform providers such as SAPHybris, SFCC, Oracle and Magento.

Prior to joining to Cybersource he served as Sales Director for SecureTrading a gateway and acquiring bank service provider, which he joined from First Data as eCommerce Sales Director.
Over the last 18 years, he has held senior sales and operational roles in payments software companies, such as Universal Payment Gateway, Logic Group, ClearCommerce and Head of Payments for Unibet a tier 1 Nordic facing online sportsbook.

About CyberSource

CyberSource is a global, modular payment management platform built on secure Visa infrastructure, with the insights of a USD 427 billion global processing network. It helps businesses enhance their customer experience, grow revenue, and mitigate risk. For more information, visit cybersource.com.

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