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Prepaid International Forum Argues against European Plan for Online Authentication

paymentssecurityThe Prepaid International Forum has joined the chorus of criticism of a European plan for new online transaction authentications, following the lead of Visa and other payment industry participants.

The trade group said Nov. 28 that it has signed a letter addressed to Valdis Dombrovskis, the European Commission vice president in charge of financial services, “that outlines the potential harms” of new and stronger online authentication rules. The European Banking Authority in January is set to release its online transaction rules in response to the revised Payment Services Directive, or PSD2, which calls for “strong customer authentication” for online payments. The authority wants to tighten authentication for online transactions of 10 euros (US$10.60) or more. The rules would apply to domestic e-commerce operations and foreign Websites selling to European consumers.

According to the letter, the authority’s proposals “diverge from its mandate under PSD2 by not allowing for the risk-based approach to authenticate customers” and “will result in an increase in consumer harm by reducing customer trust in their payment methods, the choices open to them and restricting competition.” In total, 39 Europe-based groups that represent online merchants, the leisure and travel industry, payments, telecoms and other areas signed the letter.

The proposals would bring about the end in Europe of one-click checkouts that Amazon and other online retailers have implemented, and quick payments via mobile apps that store payment card data, according to Visa.

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