With PSD2 and its transformational effects on the world of banking arriving in January 2018, the European Commission has agreed to allow banks more time to achieve required standards.
PSD2 will still launch as planned at the beginning of next year, but the parts of the new directive relating to transaction security will be put on hold for a further 18 months.
It is expected that a further layer of security will be combined with traditional banks details, creating a more robust line of defence against fraudulent activity. Organisations may not have to add further security features if they are already up to this multi-factor standard.
The European Commission said: “Strong customer authentication is already commonly used throughout the EU. For example, when customers pay with a card at brick-and-mortar shops they are required to validate a transaction by typing their PIN codes on card readers. However, this is not the case for electronic remote payment transactions, be it a card payment or a credit transfer from an online bank.”
In the wake of the new European directive, banks will no longer have complete control over customer data, with it being made freely available to third parties that are offering cutting edge, innovative approaches to banking tasks.
Banks are in a position where they will have to innovate to prevent becoming a commodity, and HSBC is a prime example of a UK bank looking to get ahead. HSBC has shown keen interest in implementing Open Banking, a system at the core of PSD2 that promotes collaboration and the free sharing of data.
Recently, the UK Open Banking project made a move in preparation for the directive when more payment account types were brought within the bounds of PSD2. Digital wallets, credit and prepaid cards will now be factored into the arrival of the EU regulation. The UK Open Banking project was brought into action by the Competition and Markets Authority (CMA).