PSD2: The Legacy

We can’t release commercially sensitive information, but the results are particularly impressive - in part - because Elavon specialises in providing safe, secure payments for some of the most fraud-targeted sectors, including retail, airlines and travel.

“For our customers it means less losses,” says Federico Gaffney, who was working with the regulators on the Elavon PSD2 project team.

“Fraud ultimately, or mostly, impacts merchants and that increases the cost of accepting payments. The fraud cost is an expense as well as a loss to our merchants. So, less fraud is a really good thing for everyone, including card holders – our customers’ customers,” he adds.

“Less fraud means that we can also offer other mechanisms to reduce the friction PSD2 and SCA have introduced, which, in turn, reduces cart abandonment even further. So overall, reducing fraud is good for both the ecosystem and the businesses we work with,” says Federico.

**Source: Elavon fraud amounts including non-3DS ecommerce transactions Q3,2019-Q1,2022.

“At the start of the PSD2 roll out had someone suggested approval rates after PSD2 would have been in line with our approval rates before we started this programme, I don’t think anybody would have believed that … and yet we have managed that,” says Rob Evans, PSD2 Project lead at Elavon.

“We were expecting that the project was going to be a challenge, and it required collaboration from many different teams within Elavon, as well as across the payments landscape,” adds Federico Gaffney, who was regulator-facing in the Elavon PSD2 Project team.

“Thankfully, and proudly, Elavon was able to succeed in implementation with our customers without major disruption.”

“We’re all customers as well, right? And we all interact on the web. I think what PSD2 has done is it’s given reassurance and confidence in the market,” says Rob Evans, PSD2 Project lead at Elavon.

“I think there’s a lot of people more conscious now about their information, their data, who’s storing it, how it’s being stored and whether or not your card details are being transacted securely.

“PSD2 has been successful in making sure that that has now taken place. So, when you’re online and you’re purchasing something and you get that verification through your phone, table or device – wherever it may be – it gives consumers more confidence that when they transact their details are going to be safe,” he says.

“That’s going to be more and more important as we move more and more into the ecommerce and digital space,” adds Rob.

“For the first time, merchants also got a better understanding of their solution architecture for their customers and who to work with and when,” says Russell Green, who was customer-facing for the Elavon PSD2 project team. “Our customers took the opportunity to redesign the customer payments journey, to make a more seamless and frictionless experience from their customers perspective.”

“Payments, in some quarters, were almost seen as being overly complicated especially with all the acronyms we use,” says Rob Evans, Elavon PSD2 project lead. “As merchants needed to get ready for PSD2, they needed to break down their payment structure into little bite sizes to know who needed to do what… their acquirer, the issuer, the banks, who are they all and from where are they operating… so awareness of the infrastructure is much better now than it’s ever been.”

“Cart abandonment, where consumers bail out before completing their online purchase, is inevitable while card holders are getting used to new challenges in authentication,” says Federico Gaffney on the Elavon PSD2 project team. “We expect that to keep improving as the new way of making purchases online embeds in our lives and we get more used to it.”

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•  … is experiencing cart abandonment, ensure you are doing all you can to support your customers with these helpful tips. 
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“If you’re seeing drops in authorisation rates, increases in service fees and a less than elegant customer experience talk to your payments service provider and your Elavon relationship manager,” says Russell Green, Elavon PSD2 project team. “We have witnessed challenges with flagging transactions correctly, leveraging the various out of scope or exemptions options to minimise friction whilst delivering a great customer experience.”

“One of the initial objectives of the regulators was to ensure that there were alternatives to card payments, which were basically account-to-account payments,” says Federico Gaffney, who was working closely with the regulators on the Elavon PSD2 project team. “PSD2 hasn’t achieved yet what it aimed to on the open banking side of things. So, account-to-account payments are growing but not reaching the levels of volumes to yet be a valid alternative to card payments for the whole market.

“PSD2 will be revised, and that’s PSD3. I predict they’ll be focusing a little more on exemptions for those types of transactions that do not carry risk of fraud,” he adds.

“I believe PSD3 will look at harmonising alternative payment integrations,” says Russell Green, who was supporting customers with implementation on the Elavon PSD2 project team. 

“Rewriting the rulebook will be a challenge. PSD and PSD2 got an infrastructure in place and a regulatory framework for payment service regulators. The next step will be reimagining the fraud detection structures completely.”