The closure of the consultation period on fraud reporting guidelines signals the home straight for banking and fintech firms
Today marks a pivotal moment in banks’ and payment providers’ PSD2 preparations as the European Banking Authority (EBA) closes its consultation period on fraud reporting responsibilities.
Increased anti-fraud mechanisms under PSD2 mean that banks and payment providers will need to ensure that high-level fraud reporting is undertaken after the January deadline for compliance is in place. At present, data on payment fraud is unreliable and incomplete across the EU – the new rules will mean that firms will be judged on their ability to control payment fraud. Poor performers will be required to implement stronger customer verification measures, thus raising the possibility that compliance becomes highly important for the customer-facing part of the business.
Firms within the payments sector will be required to be compliant by the 13 January 2018, under the new EU-driven law. The regulation, which will apply to approximately 95 percent of card payments made in Europe, is envisaged to improve the security of transactions as well as saving consumers an estimated €700 million per year in surcharge-related costs.
Nigel Edwards, SVP Insurance & Head of UK at EXL Service commented: “The new Open Banking regulations offer many benefits to consumers – better choice and lower costs are just some of things we can expect to see as the rules come into force. The sector is ripe for overhaul and we can expect new markets and new market entrants to appear offering more agile, customer-oriented payments services.
“Seen as a programme of compliance-driven digital transformation, PSD2 can actually serve as an opportunity for banks to regain a competitive edge. New fraud reporting standards may require payments providers to implement more customer verification measures – therefore strong compliance may result in the opportunity to create a more streamlined customer journey than competitors who don’t achieve good enough fraud protection.”
He added: “2018 promises to be a year full of challenges for the financial sector as further regulation in the form of GDPR and MIFDii pose substantial hurdles from an organisational and IT infrastructure perspective. With increasing clarity being given on what is required of firms in the face of these new rules, it is up to leaders in their respective industries to embrace these changes as opportunities to become more competitive digital players.”