Two-factor authentication: a specter for Switzerland?
PSD2, two-factor authentication, or 3D Secure? The new EU payment directive goes by a variety of names, but few know what it’s all about. But beware, online commerce is facing a major change. A study predicts losses of €57 billion for 2020 alone. But how is Switzerland affected?
The EU Payment Services Directive (PSD2) was originally scheduled to come into force on September 14, 2019. However, given the current chaos surrounding its implementation, BaFin (Federal Financial Supervisory Authority) has granted a delay. How long will it take?
What is PSD2?
The directive stipulates that for online shopping with credit cards, customers must additionally identify themselves when paying online for security reasons – hence the name two-factor authentication.
It’s important to note that PSD2 requires strong customer authentication (SCA) at all times. Customers will be required to verify their identity with at least two elements from the categories of knowledge, possession, and inherence (two factors). However, SCA has been implemented for some time now with the 3-D Secure security standard and is also in use in Switzerland.
Is Switzerland excluded? Not entirely.
This is not directly relevant for Switzerland, as PSD2, as a European directive, is not applicable. Certainly not for purely domestic payments in Swiss francs. PSD2 applies only within the European Economic Area (EEA), not beyond. This also applies to cross-border payments from the EEA to Switzerland and from Switzerland to the EEA. However, for the part of the payment that is geographically located within the EEA, European payment service providers are bound by PSD2.
However, since Switzerland is not a payment island, it is also clear that Swiss payment service providers will sooner or later be confronted with the new EU regulations.
How do I prepare?
The good news first: the responsibility for PSD2 lies primarily with the payment provider. And it doesn’t affect every merchant in the world. So it depends on where you sell and how you get paid.
I accept credit cards. Jackpot! PSD2 specifically affects credit card transactions. When PSD2 comes to Switzerland, you should check whether your provider is compliant. Don’t worry, we at MyCOMMERCE will support our merchants.
I don’t accept credit cards. Lucky for you! If you only accept cash or other offline payment methods, this whole issue doesn’t affect you at all.
You can find more information about creating an online shop here.
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