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Expert opinion

Quick PSD2 Recap: What – When – Who – Where?

Tuesday 23 January 2018 | 10:33 AM CET

Most merchants are unfamiliar and unaware of PSD2. Thus, we invited John Snoek, VP Product & Operations at Acapture, to give a quick recap of this important payments directive.

Already a brand new year upon us and we are still obsessing about the topic of PSD2; however, the context has changed a bit with the regulation becoming official just over a week ago. We’re no longer talking about preparation, we’re focused on the urgency for merchants and retailers to have a plan in mind and put it into practice as soon as possible. Since theoretically, the implementation of PSD2 has already passed, we can expect to see consequences of non-compliance any moment.

With PSD2 being top of mind for the entire industry, it was a great surprise to learn from a recent research study that many UK retailers are not prepared at all for the regulation that recently came into effect.

How optional is it to become compliant?

The Payment Services Directive 2 is the European regulation designed to promote innovation and stir up competition within the payments sector.

In fact, it will actually result in a dramatic change for the retail industry. When we talk about PSD2 we think of open banking, retail revolution, increased innovation and lastly, new and improved services to end consumers. We think about new rules that apply when handling online transactions throughout Europe.

PSD2 affects European merchants as well as merchants based in Asia, the US and the rest of the world, who already do business or are intending to expand their business in Europe. The aim of the new directive is providing a more secure shopping journey and more choices for the end consumers.

The entire industry is curious and carefully watching the regulation’s ongoing development and the main results are expected to take shape starting this year. However, one thing is certain: there has been a real shake-up for one of the trendiest business model companies, namely marketplaces, whose increasing influence has turned out to be one of the game-changers in cross-border ecommerce.

What’s the challenge posed by PSD2 to online marketplaces?

The regulation prevents third-party platforms to interfere with the transfer of funds from sellers to buyers, precisely the way the marketplace business model is designed. All businesses operating on this type of model have to comply with PSD2 by either obtaining a payments institution license or partnering with an operator specialized in payments.

The first solution is rather costly and requires a long timeframe for becoming compliant, which at this point is quite risky considering that PSD2 has been officially implemented not so long ago. On the other hand, the second option offers marketplace operators the chance to concentrate on scaling while leaving regulation and payments complexities to an experienced payment provider that would make PSD2 compliance a seamless process. 

Acapture’s marketplace dedicated solution SlicePay, not only takes away regulation concerns, but also handles complex payouts to different partners using an automated system. With this cost-effective, flexible and quick integrating solution, merchants benefit from an easy way of becoming compliant with the regulation while also taking care of the most complex payments, specific to marketplace models. So, the marketplace receives only one payment from the shopper that SlicePay divides to the different vendors, at the right time and in the corresponding currency, all while being compliant with PSD2.

PSD2 compliance urgency

With almost half of the surveyed UK merchants unaware of PSD2, it’s obvious that all retail operators active in the EU have no more time to lose. According to the research survey, only fifty percent of retailers are familiar with PSD2, two thirds are not compliant yet and one third of them is completely unaware of the impact the regulation will have on their business.

Clearly, the current situation is worrying, given that from now on we can expect to start seeing consequences of non-compliance at any time. Quoting the research, the surveyed retailers “are left in a state of paralysis” in regards to the regulation.

PSD2 - Friend or Foe?

While it seems like a complicated legislation posing many restrictions, PSD2 is said to be ”innovation disguised as compliance”, that gives merchants the opportunity to offer optimized shopping experiences, fostering increased customer loyalty.

The regulation can act both as an opportunity and as a threat, depending on the approach and attention that merchants adopt in regards to it. Merchants that will start dedicating time to learn more about the effects of PSD2 on their business and how they can take advantage of this scenario, will experience it as an opportunity whereas the others will perceive it as a stop in their pursuit of growing and developing their business.

Either way, PSD2 compliance is mandatory, so either sooner or later, every merchant will have to take measures in order to become compliant.

What’s next?

The significant lack of both PSD2 readiness and awareness in the UK might suggest that the same is happening in other countries than the UK. This puts a great pressure on retail operators to get themselves an action plan as soon as possible.

Being confronted with the tight schedule and documentation required to become PSD2 compliant, retailers might feel overwhelmed and confused of what they ought to do next. The first step is to get the essential information, which they can easily find in this quick read of MUST - KNOW PSD2 facts. They must inform themselves properly about how the regulation affects their business and then equip themselves with a PSD2 compliant solution to support their growth.

About John Snoek:

John Snoek, VP Product & Operations at Acapture, has over 20 years’ of go-to-market experience in product development, management and launch. Prior to joining Acapture, John was responsible for global marketing and product management, being also one of the pioneers in the field of alternative payments.

 

About Acapture:

Acapture is the subsidiary company of Payvision, one of the world’s fastest growing global acquiring networks. Licensed as a payment institution by the Dutch Central Bank, Acapture offers a complete data-driven omnichannel payment solution, capable of managing a payment at every stage, from checkout to fund collection to settlement. Acapture specialises in maximising revenue for merchants and marketplaces with international ambitions.

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