A cross-industry letter signed by 39 European and national organisations in the payments value chain has hit out at European Banking Authority (EBA) plans to toughen up authentication rules for online transactions under the revised Payments Service Directive (PSD2).
The EBA's proposals to mandate tighter authentication for transactions over EUR10 has rung alarm bells with industry practitioners who claim that the new rules will lead to more declined transactions and abandoned purchases as customers are forced to conduct additional security checks at the checkout.
to European Commission vice president Vladis Dombrovskis has been signed by a broad swathe of industry practitioners representing the payments, cards, e-commerce, small merchants, ICT and digital technology, telecoms, foreign trade, and leisure and travel industries.
It highlights a potentially "chilling effect on the digital single market" of the prescriptive rules, and instead calls for a more flexible risk-based approach to securing individual transactions.
"We are fully aligned with regulatory objectives to reduce fraud to the lowest possible level which is in the interest of all parties in the payments chain," the letter states. "Our concern is that by choosing a very blunt approach and disregarding some of the highly innovative approaches to authentication and risk management - which are already demonstrably working in the market - this goal will not be achieved and the consequences will be highly disruptive."