A significant proportion of UK retailers are risking fines and reputational damage by not adhering to PSD2 regulation from the EU, research by fraud detection and payment acceptance specialist Ravelin finds today.
Perhaps because of Brexit, 42% of UK retailers wrongly think that PSD2 regulation, which aims to make electronic payments more secure in Europe, does not affect them, while one in 10 (12%) don’t know at all whether it affects them. European-based retailers seem to have a greater understanding of PSD2, as around two thirds recognise that PSD2 impacts them.
PSD2 was implemented in the UK despite Brexit as it was passed into law before the withdrawal. It helps to make payments safer and reduces fraud because users need to provide additional authentication before making a payment.
UK fashion retailers are the most in the dark about the regulation — only a third (33%) think PSD2 will impact them — while UK grocery retailers seem to be the most prepared, with 60% saying they are aware that the regulation affects them.
Perhaps as a result of this lack of awareness of the regulation, UK retailers are currently sending less web traffic to 3DS, an additional security layer for online payments, than US or European retailers. Only 35% of UK retailers are sending traffic to 3DS more than 40% of the time, compared with 55% of US and EU retailers.
Ravelin’s findings today are part of a new retail report, which draws on the opinions and experiences of 1,000 fraud and payments professionals working in large online retail businesses all over the world. The report provides a valuable in-depth understanding into merchant fraud teams, their environment, top business threats, fraud activity trends and forecasts.
Mairtin O’Riada, co-founder and CIO at Ravelin said: “These massive divides in PSD2 understanding between retail industry verticals and between the UK versus Europe are worrying. Perhaps payment service providers are not doing enough to educate business owners affected.
“Regulation around payment security is only likely to get more stringent over time as the world’s reliance on ecommerce increases, so it’s imperative retailers are able to strike a balance between security and a seamless payment experience for customers.”