EC is adopting the regulatory technical standards on customer authentication, which will make electronic payments in shops and online safer. These rules implement the EU's recently revised Payment Services Directive (PSD2).
PSD2 is aimed to increase the level of security and confidence of electronic payments. PSD2 requires payment service providers to develop strong customer authentication (SCA). The rules being adopted specify the requirements for common and secure standards of communication between banks and fintech companies. These rules, therefore, have stringent, built-in security provisions to significantly reduce payment fraud levels and to protect the confidentiality of users' financial data, especially relevant for online payments. They require a combination of at least two independent elements, which could be a physical item—a card or mobile phone—combined with a password or a biometric feature, such as fingerprints, before making a payment.
The rules will allow consumers to access more convenient, cost-effective, and innovative solutions offered by payment providers. They allow consumers to use innovative services offered by third-party providers, also known as fintech companies, while maintaining rigorous data protection and security for EU consumers and businesses. These include payment solutions and tools for managing one's personal finances by aggregating information from various accounts. Following the adoption of the regulatory technical standards by EC, the European Parliament and the Council have three months to scrutinize them. Subject to the scrutiny period, the new rules will be published in the Official Journal of the European Union. Banks and other payment services providers will then have 18 months to put the security measures and communication tools in place.
Keywords: Europe, EU, Banking, PMI, PSD2, Fintech, Regulatory Technical Standards, Customer Authentication, EC
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