PSD2: paving the way for a smooth transition

18 September 2019

Business Insight

The Banque de France has resolved uncertainties surrounding the application of the European regulations on Strong Customer Authentication and shared norms for open and secure communications. While 14 September marked its official entry into force, the French ecosystem has three years to adapt to implementation of the new regulations. Analysis follows.

September 14, 2019 is a date that has made headlines, and continues to do so. And for good reason, as it was the deadline for alignment with the new Strong Authentication and RTS (Regulatory Technical Standards) as defined by the European Banking Authority under PSD2.

The Banque de France pours oil on troubled waters

Aware of the scale and complexity of this process, the country’s central bank, the Banque de France, which is responsible for managing migration in France, has decided to grant an additional three-year period to ensure that all entities affected by strong authentication have a secure solution in place by 2022. 

During this period, a comprehensive communication plan targeting all the stakeholders will be carried out, and progress reports will be published in the annual reports of the Banque de France’s Observatory for the Security of Payment Means (Observatoire de la sécurité des moyens de paiement).

According to the objectives set by the French banking authority, 70% of cardholders should have adopted the new security measures and 60% of electronic payments should be covered by the end of 2020. The remainder of the migration will take place in 2022. Some banks are even ahead of schedule and have already implemented enhanced security systems.

These statements are intended to reassure payments processors and e-commerce players, many of whom had raised concerns. E-merchants fear they will lose revenue as a consequence of new security rules for online payments, in particular the introduction of alternatives to codes sent by SMS (3DS). Banks, for their part, fear that their services will be flooded with complaints from customers who are victims of these vicissitudes. The British Banking Federation earlier predicted that 25-30% of card payments on merchant sites could fail in September as a result of implementing the Directive. 

Meanwhile, Lemonway has already prepared to move forward with its banking partners to rapidly comply with the new regulations. In parallel, the company is conducting an awareness campaign and training with its partners and clients to provide a smooth and successful transition.