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Payment Services Directives 2 (PSD2)
Last updated on: June 27, 2023

Payment Services Directive 2 (PSD2) is a European Union mandate that regulates payment services and providers throughout the European Economic Area (EEA). This directive allows consumers and businesses to more easily access financial services across the EU, and it better protects customers when they pay online by increasing security. Read below to find out what you need to do in your Ontraport account to be compliant with PSD2

Payment Services Directive 2 (PSD2)

PSD2 requires SCA if ALL of the following apply to you:

  • Your business accepts credit or debit cards.
  • Your customers purchase your products or services with credit cards issued by banks located within the European Economic Area (EEA).
  • Your merchant account or merchant acquirer (bank processing the payment for your merchant) is located within the EEA.

Banks may decline payments if your business fits the criteria above and SCA is not in place. In Ontraport, these declined payments will result in declined sales.

Strong Customer Authentication (SCA)

SCA requires two out of three mandatory authentication measures to be accepted before a payment can be processed. The measures described in the regulatory technical standards are:

  1. Knowledge: something only the user knows such as a password or PIN
  2. Possession: something only the user has such as a token, code or key
  3. Inherence: something inherent to the user such as a fingerprint, biometric or voice

Under PSD2, payment service providers — such as Stripe and Authorize.net — must apply SCA for the following types of transactions:

  • Every payment over €30
  • Transactions under €30 if there have been five or more transactions or charges totaling €100 or more on the same card without SCA

3D Secure authentication

3D Secure authentication comes into play when a payment is submitted. Before the transaction is processed, the card and the payment details are sent to your 3D Secure provider to check if the transaction is at risk of fraud. If fraud or other risks are detected, 3D Secure requires the cardholder to authenticate the payment. Once authentication is provided, the payment will continue processing.

Cost of 3D Secure

The gateway you are using will determine the cost, if any, for 3D Secure.

  • Stripe: offers its built-in 3D Secure service for free.
  • Authorize.net: requires a set-up fee and recurring transaction fee. Visit this page to get started through CardinalCommerce.

Enable 3D Secure in Ontraport

  • Go to SalesSettingsGateways and locate the 3D Secure option at the bottom of your Stripe or Authorize.net gateway.
    • Stripe and Stripe Token: Toggle the 3D Secure Authentication option on.
    • Authorize.net:Sign up directly with CardinalCommerce. Once you are signed up, collect your app ID, API key and org unit ID from CardinalCommerce and add them to your gateway settings.

Once you’ve completed your setup, all pending transactions will go to 3D Secure to determine if they are valid and secure before getting approved. If 3D Secure needs more authentication information, they’ll request what they need from the buyer with a pop-up. This will ensure that banks will not decline payments due to missing SCA, and your customers’ transactions will be protected.

Disclaimer

This article’s information was collected through an immense amount of research across many sources including the actual Payments Services Directive< and Regulatory Technical Standards. This information is meant as a reference guide and shouldn’t be considered legal advice. You can use this article as a starting point to help you decide what you should do next. Ontraport cannot be held accountable for any decisions you make based upon the information contained within this article.

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