Security Features to Look for in a PSD2 Compliance Solution
PSD2 Compliance
Modern-day online shoppers demand a lot of features and conveniences from their banks, payment service providers, and online retail stores.
Be it taking out a loan or online shopping – customers expect seamless user experiences across all channels.
From interacting with the bank to finalizing the purchase request on an eCommerce platform – everything needs to be smooth, digitalized, and seamless.
On the other hand, regulators are asking these institutions to prioritize security.
The relentless threat of cyber-fraud looms large over banks, payment service providers, and online retail stores.
For example, account takeover fraud (ATO) has emerged as a major threat this year. ATO accounted for 54% of all eCommerce fraud attempts in 2020.
That means ensuring customer security has to be a top priority.
That’s why the Second Payment Services Directive or the PSD2 guidelines feature various security-related requirements.
All banks, payment service providers, and online retail stores need to meet these additional security challenges.
PSD2 attempts to increase consumer rights by enhancing security requirements through Strong Customer Authentication (SCA).
Thankfully, merchants still have more time to introduce strong customer authentication (SCA) features on their eCommerce platforms. PSD2 implementation has been delayed in various parts of the world.
So, online businesses have plenty of time to take robust steps to reduce the risks of cyber fraud.
So, what security measures should online merchants take to achieve compliance with PSD2 regulations? Here’s a guide –
Strong Customer Authentication
An online merchant must invest in a PSD2 compliance solution tool that allows them to implement SCA requirements on the platform.
Intelligent authentication is key to delivering secure and compliant online shopping experiences.
If your security or compliance tool can assess the risk levels of each transaction based on different data points, your online platform will be ten times more secure.
The compliance tool should be able to detect details like transaction history, customer browsing habits, device-related information, and many more.
Then, automatized programs (preferably AI-powered) should determine what degree of authentication is required for each transaction, based on SCA requirements.
According to the PSD2’s SCA requirements, authentication needs to be based on two or more of these factors –
- Knowledge (e.g., unique passwords, PIN codes)
- Possession (e.g., the user’s mobile device)
- Inherence (e.g. biometrics)
Make sure the compliance tool you pick asks users to share and verify these details on your payment platforms.
The tool should also be able to detect which transactions qualify for SCA exemptions automatically.
For example, exemptions to SCA requirements are allowed for low-risk transactions.
Hence, the tool needs to provide adaptive authentication and adjust itself based on the risk level of each transaction.
The goal? Make sure fraudulent payments, account takeovers, and other types of fraud attempts are prevented long before they cause any damage to consumers.
That’s why the perfect PSD2 compliance tool should be able to analyze transaction data in real-time.
Such constant assessments also enable online merchants to discover emerging fraud types or patterns.
Tools that have machine learning capabilities can even produce transaction risk scores for each transaction.
These tools should also be updateable. For example, in addition to tackling known fraud scenarios, over time, it should be able to come up with new detection and prevention techniques.
Online fraudsters are constantly evolving their practices. Constant transaction risk analysis enables online merchants to keep up with these evolutions.
With the right AI-powered compliance tools, they can better protect their customers from the latest cybersecurity risks.
Plus, their operational costs and losses to fraud attempts will also decrease.
Consistent Transaction Assessments
According to the PSD2 guidelines, every online merchant is responsible for monitoring transactions on their online retail platforms.
Preventing the Compromise of Mobile Devices
When hackers compromise the mobile devices of consumers, they can act as Trojans and wreak havoc on online shopping platforms.
For example, they can pretend to be a consumer, steal their data, and then systematically attack each online platform the consumer was a member of.
By the time these compromised mobile devices are tracked, online merchants lose significant amounts of money.
That’s why proactive security features on PSD2 compliance tools are so important.
These security features should be able to differentiate between normal and compromised mobile devices.
For example, if a regular consumer’s actions on the eCommerce website look suspicious, the compliance and security tool must detect such anomalies. Then, these tools should send notifications to human operators.
For example, if your eCommerce platform is integrated with a compliance tool that offers runtime protection, you can easily mitigate the risks that result from compromised mobile devices.
Consolidating the ways in which the platform interacts with the consumers is vital for preventing unknown and complicated security attacks.
Although it’s almost impossible to guarantee high-quality security in today’s threat-laden landscape, there are various compliance and security tools that can help banks, payment service providers, and online retail stores remain secure and compliant with PSD2 regulations.
Businesses must invest in such anti-cybercrime tools!
Category: Business
