Industry figures have downplayed fears that new EU anti-fraud rules for online payments will hit business despite warnings of “serious disruption” from banks and paymentservice providers.
Banks and financial service trade associations warned the EC and European Banking Authority this month of widespread lack of preparedness for phase two of Europe’s Second Payment Services Directive (PSD2), due to come into force on September 14.
This imposes new verification requirements, or Strong Customer Authentication (SCA), for online payments of £30 (€30) and above.
Phase one of PSD2, introduced in January 2018, prohibited businesses from charging consumers for card payments.
The banks warn of “massive loss of revenue, with an estimated 30% of e-commerce card transactions predicted to be declined”. Payment processors including Worldpay have issued similar warnings, saying: “Everybody is worried about revenue loss.”
Alan Bowen, legal advisor to the Association of Atol Companies, said “it would be a serious issue” if the warnings from banks and payment processors prove right.
But he told Travel Weekly: “Most people are reasonably confident the banks know what they are doing. This was not dreamed up yesterday. Some members did express concern four or five months ago, but people are reasonably relaxed. I’ve been receiving messages from my bank about it, although some customers may not be switched on.”
Advantage Travel Partnership operations director Paul Nunn said: “We’re having conversations with card providers, [but] we don’t have a lot of OTA members.
“The main issue is with [corporate] travel management companies. The corporates use plastic and some members use their own cards [to make bookings]. That will be an issue for out-of-hours stuff.”
Nunn said: “I’m not sure the card acquirers are ready. I don’t think the payment service providers are ready. [But] the industry is relaxed.”
Abta chairman and Aito director Noel Josephides said no one at either association had raised the issue.
SCA extends the principle of twofactor authentication which already exists for card-present, chip-and-pin transactions to e-commerce. It means consumers will need a mobile phone when making online payments, with secondary verification made via a bank’s app, use of a phone with a fingerprint password or by entering a code sent to the mobile.
Bowen noted consumers booking via mobile “will have to read a code while using the phone and there will be times when people find it difficult”.
He said: “There could potentially be an upside for the downtown travel agent. I don’t suppose people who reach the last point of booking would give up. They would look to see if there was a phone number on the site or look up the nearest agency.”
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