PSD2: market struggles with APIs, SCA

Author: Jimmie Franklin | Published: 24 Mar 2020

The EU’s second payment services directive (PSD2) has remained a challenge for financial services firms due to market fragmentation as well as technological issues, such as application programme interfaces (API) and strong customer authentication (SCA).

Market participants remain concerned about these issues, which they fear are hindering the success of the directive, which is intended to increase competition and customer satisfaction.

"A key challenge remains the roll-out of strong customer authentication, particularly for the ecommerce industry" said Linklaters UK head of fintech, Richard Hay, who added that fintechs are cross-border by nature, which makes fragmented regulatory approaches particularly difficult.

SCA is intended to reduce fraud by making online payments more secure. The regulatory requirements state that payment services’ authentication procedures need to include mechanisms that detect attempts to use personalised security credentials that were lost or stolen.

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