Major retailers ‘unprepared’ for PSD2
Written by Chris Lemmon
Major retailers in the UK are “unaware, unprepared and paralysed” for the second Payments Services Directive (PSD2), which comes into effect this weekend, according to new research.
PSD2 requires banks to grant third-party providers – including retailers – access to a consumer’s bank account to initiate payments and source customer data in a regulated manner. The legislation has been introduced to promote competition and innovation across the payments industry.
The new study from Consult Hyperion is based on survey responses from over 30 tier one (£500m+ turnover) and tier two (£30-500m turnover) in the UK. It found that 48 per cent are unaware of PSD2. More than two-thirds are not ready to comply with PSD2, while a third are not aware of the effect the new legislation will have on their business.
Just 16 per cent of respondents believe that PSD2 will have a major impact on their company, with only a third confirming that they will take action. Once the implications of PSD2 were explained, 94 per cent of respondents said they would like to reduce card fees, while 74 per cent said they want to reduce fraud and data breaches.
Tim Richards, principal consultant at Consult Hyperion and co-author of the report, said: “The impending shift to “Open Banking” through the implementation of PSD2 is one of the hottest issues in banking and payments. However, it seems that merchants and the wider retail technology community are unaware of the regulation and its far-reaching ramifications.
“The use of two-factor authentication and access to customer bank accounts will allow retailers to dramatically lower card fees, mitigate fraud and limit the scope of data breaches. But arguably the biggest value is in access to consumer financial data that opens up new ways to do business.”