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Payment Services Directive 2, Explained

Change is on the way for online consumers that every online retailer, ticket seller, and fundraiser should be aware of. Just as we are settling in a year after a major review of consumer rights and productions with the introduction of GDPR, we are contending with another consumer regulation in the form of PSD2.

Short for ‘Payment Services Directive 2’, PSD2 is a new EU-wide ruling that comes with a swathe of requirements on how organisations interact with their customers when making a purchase, much of which is far from concrete and very much open to interpretation as to when, how, and where it will be implemented. In terms of the ‘when’ that this regulation will be implemented, the initial deadline of September 14th looks like it is going to be the start of a phased 18-month implementation period, instead of a hard deadline.

Thankfully, unlike with GDPR, the legwork needed to implement PSD2 will be carried out by card issuers (primarily Visa and Mastercard), merchant banks (Worldpay, Barclays, etc) and payment service providers (SagePay for most Spektrix clients in the UK or Republic of Ireland).

To some degree, PSD2 appears to have gone under the radar until recently. According to a survey conducted by the British Retail Consortium, 75% of online retailers were completely unaware that PSD2 was even happening.

This ignorance is more or less concerning depending on what any given retailer needs to do to meet the new requirements. At Spektrix, we are taking care of this for our clients completely, with no further action necessary for them in the vast majority of cases. We are liaising directly with payment service provider SagePay to make sure any changes needed in the booking processes are seamless.

The main changes are requirements for online purchases to have 3D secure processing in place, which many customers are already used to when shopping online. To the layperson, 3D Secure is the ‘Verified by Visa’, or ‘Mastercard SecureCode’ checking process that appears as part of the order confirmation process. For the customer this may involve either entering a password or receiving a text with a code they need to enter, potentially adding an extra layer of complexity into the online booking process. If you are using Spektrix and SagePay, the process to switch 3D Secure on is very straightforward, and the Spektrix Support team are always happy to advise further with these sorts of queries.

However, there is a new version of 3D Secure available that makes any necessary authentication as frictionless to the customer as it can be. This new version, called 3D Secure 2, will be automatically rolled out to Spektrix clients via SagePay when it is available, again without clients needing to take any action. Full details on the changes being made by Spektrix and SagePay can be found here if you are a client.

If you aren’t a Spektrix client, the important thing that you need to do is confirm with your acquiring bank and payment service provider that they are ready to implement any required changes. Most providers should have sent some form of communication out by now to detail what changes they need to make, and information on what this means for retailers and customers. If you aren’t a Spektrix client and haven’t received any information directly, we would strongly recommend you reach out to your payment provider and bank to ask them if they can provide this information. Even though the original 14th September deadline is now going to be extended by 18 months, there needs to be evidence that the ‘necessary steps to comply with the plan’ are in place by then, according to the FCA

Online ticket sellers and fundraisers are looking for a quick, seamless experience for their customers and donors and PSD2 may feel like another step and complication getting in the way. All the more reason to check in with your ticketing and payment providers to ensure the quickest and most seamless process possible.