With new rules from an EU Directive being released and adopted by the UK, banks are having to change their approach on allowing online transactions to take place without any extra layers of security. The Payment Services Directive (PSD2) is being brought into action in September 2019, and is expected to affect the way UK citizens shop online.
With the (PSD2) being introduced, banks are having to implement extra layers of security when their customers are shopping online, so expect one-time text messages containing a code to verify your purchase. Although, this process will not stand for every single transaction you ever process online, it only stands for single transactions that are £27 and above. However, if your bank can prove that they have a good ‘no fraud’ history, it can allow exemptions on single transactions over £450, and they can decide whether your transaction is considered low or high-risk, which will determine whether you have to enter the one-time text code or not.
Although the aim of the new system is to enhance payment security and reduce fraud, the Managing Director of Fair Finance spoke to the BBC and said, “These systems are only designed for 95% of the population - while the remaining 5% are hung out to dry”. It is evident that many people are going to be inconvenienced by this change in security, as it seems the people who don’t have access to a mobile phone or access to a good phone signal in rural areas are going to experience great difficulty when shopping online.
Reports say that one bank advise any customers who don’t have access to a mobile phone or good enough signal should attempt to find alternative ways of payment for online transactions, such as ‘PayPal’. The company that represents UK banking and the finance industry, UK Finance, urged its members to begin looking for alternative ways of verifying their customers identities. They suggest the possibility of calling their customers through landline, or using biometric data, such as fingertip verification on their banking app. Other suggestions weren’t as practical, such as the customer phoning their bank when wanting to confirm their online transaction, which would be inconvenient and time consuming.
However, retailers are causing a lot of aggravation for banks, as they want to keep the online shopping process as smooth as possible. So, banks are now in a position of trying to uphold the new rules implemented by the EU Directive, as well pleasing all of their customers and retail companies. But there have been concerns raised that banks aren’t communicating these changes to their customers properly.