The European association for the e-commerce sector urgently requests the European Parliament to approve the new EU rules on payment services - the Payment Services Directive 2 (PSD2). Ecommerce Europe asks for a positive outcome of the vote in the plenary session of today: The new rules hold great potential to stimulate consumer trust in online cross-border payments. However, the association warns that after the vote much work is still to be done by regulators to improve the pan-European framework for online payments.
Ecommerce Europe reports that for many merchants online payments is a problematic area when selling cross-border. High costs, difficult identification of the consumer, complicated check-out processes hurting conversion, and lack of interoperability - especially concerning mobile payments - are the most pressing issues for online merchants. The PSD2 can reduce these burdens for merchants by harmonizing the legislative framework for online payments in Europe - as long as uniform application and flexibility in authentication mechanisms are guaranteed, and rules on liability are positioned properly.
Technical guidelines for implementation will affect e-commerce
When the update of the Payment Services Directive has been approved by the policy makers in Brussels, the European Banking Authority will have to draft technical guidelines for implementation of the Directive. Ecommerce Europe supports the expanded role the PSD2 gives to the European Banking Authority (EBA) in issuing common and secure standards on authentication and availability of funds, as long as these standards are developed through consultation of relevant stakeholders as the guidelines will have great consequences for e-commerce businesses. Ecommerce Europe remains in close contact with European policy makers and the European Banking Authority through formal and informal consultation fora to ensure the voice of the online merchants is heard in the process of drafting the guidelines, as the association has grave concerns that the standards will hurt the e-commerce sector.
Balance between safety, convenience, and costs needed
Paul Alfing, Chair of the Ecommerce Europe e-Payments Working Committee, explains: “Both consumers and online merchants need to be ensured of secure and reliable payments, and we look forward to work together with regulators to shape technical guidelines that guarantee this safety. Nevertheless, the new rules should not lead to excessive costs or efforts for merchants and consumers. Research has shown that many consumers will leave the check-out process when a payment becomes too complicated”. Whereas authentication of payments has always been a business decision for online merchants, the new European rules prescribe that even when there are tolerable fraud levels (e.g. when the cost of the payment is less than the cost of the payment authentication) the payment has to be technically secured.
Modern authentication methods should not be endangered
Ecommerce Europe persists that the EBA guidelines should at least leave room for advanced and secure methods of payment authentication, based on modern technologies. Because of the consumer demand for an easy check-out process, multifactor authentication has a very negative impact on conversion for merchants. More modern methods can guarantee a high level of security of digital payment transactions without causing friction to the consumer experience when shopping online. The new methods are expected to be more in line with check-out experiences fit for the shopping experience of the future, such as one-click-buy in mobile commerce.
Next steps and more information
Before the development of the technical guidelines, both the European Parliament and the Council of the European Union need to officially endorse the PSD2. The Council of the European Union will do so after the vote in the Parliament today. “We do not only count on the European Parliament, but we also urge the Ministers in the Council of the European Union to move forward with the creation of this legislative framework and to vote favourably for the proposal mid-November. Only with the commitment of the Member States Europe can come to a more innovative payments landscape”, Paul Alfing states.
For more information on Ecommerce Europe’s vision on online payments, please see the Ecommerce Europe Priority Paper (2015).