Worried about new security buzzwords such as SCA, PSD2 and 3DS2? Well, Tyl has you covered.
The short version: 3DS2 is a way to make card payments more secure. Tyl is already compliant, meeting the government’s new PSD2 regulations, so you’re good to go. If you’d like to know more about the new rules, read on…
What is PSD2?
The Payment Service Directive (PSD2) is an EU/UK government initiative that seeks to make card and online payments safer and easier, while also opening them up beyond the banks with services such as Google Pay™ and Apple Pay. PSD2 is enforced by the Financial Conduct Authority (FCA) and it is compulsory for businesses that process payments that way to be compliant. One way to be compliant is to implement 3DS2.
What is 3DS2?
Okay, we’re now going to bombard you with a bunch of initials, so be prepared…
Part of PSD2 is SCA or Strong Customer Authentication. This regulation aims to make payments more secure and reduce fraud. One way to meet the SCA requirements is to implement an extra level of authentication known as 3D Secure 2 (3DS2) – the “2” refers to the latest iteration of the process and the previous version (3DS) is in the process of being phased out by 2022.
The ‘extra level of authentication’ in 3DS2 requires two of the following three bits of information to complete a transaction:
a. something the user is, such as their fingerprint
b. something the user has, such as their phone
c. something the user knows, such as a password
So, if you already shop or bank online, you’ll probably be familiar with getting an authorisation code (‘c’ above) texted to your mobile (‘b’). If you tap your phone on a reader to pay, that has your fingerprint (‘a’) or password (‘c’) and is your registered device (‘b’). So 3DS2 sounds complicated, but as a consumer chances are, you’re already doing it without knowing.
As a business owner, why should you care?
To take card or digital payments your business needs to be compliant with SCA. The good news is Tyl by NatWest already uses 3DS2, so you’re already doing the right thing.
3DS2 gives banks more confidence in ‘safe’ transactions; they can make more-informed decisions about whether to challenge or not. This means less friction for most sales, so fewer orders dropped, meaning a likely increase in satisfied customers.
You should also be reassured by 3DS2/SCA because it doesn’t just seek to prevent fraudulent or disputed transactions. In addition, should such a transaction slip through the net, it is the responsibility of the bank to refund the customer if required, because the bank approved the 3DS2 transaction*.
So, with 3DS2 you should see a reduction in fraudulent transactions and an improved shopping experience.
*It’s important to note, that businesses are still liable for transactions that are exempt from 3DS2. In this case, businesses are responsible if a customer disputes a transaction on the basis that they did not receive the goods or service they paid for.
What does this mean for your customers?
Legislation such as PSD2 is put in place to ensure transactions are carried out honestly and securely. This protects both sellers and buyers. Customers that use your business can be reassured you are making efforts to keep their financial information locked down, and that they can be confident spending money with you through Tyl.
What happens next?
The good news is, to be PSD2-compliant when using Tyl you don’t have to do a thing.
Fees apply for using Tyl but this increased level of security for Tyl by NatWest is included free-of-charge, so your bank balance won’t even know it is being put in place.
Please reach out to your Tyl team if you have any questions on PSD2 compliance or security in general. You should also familiarise yourself with the SCA guidance on the Gov.uk website here.
This has been prepared by Tyl by NatWest for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.
Tyl by NatWest makes no representation, warranty, undertaking or assurance (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided.
Tyl by NatWest accepts no liability for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.