The Best Merchant Services that Comply with EU Fraud Rules

Monday, September 17th, 2018

Payment card fraud is a low-risk, highly-profitable criminal activity that earns criminals originating from the European Union an annual income of approximately 1.5 billion euros, according to Europol “Payment Fraud in the European Union, Perspective of Law Enforcement Agencies,” which analyzes and evaluates the threat posed by types of serious crime.

Rampant credit card fraud in the payments industry is a problem worldwide, including EU. The banking entities decided the best way to crack down on this criminal behavior is to establish guidelines to curb this behavior, triggering the Payment Services Directive. The best merchant services providers will find that the directive will ease the anxieties of both merchants and their customers.

New Rules

The European Banking Authority published the final guidelines on fraud reporting under the revised Payment Services Directive (PSD2), which aims to boost the security of electronic payments and cut down on fraud risk.

Payment Service Providers (PSPs) will need to provide data on fraud relating to different means of payment to their national regulators on annual basis, at minimum. The regulators must in turn provide such data in aggregated form to the EBA and the European Central Bank. This approach was taken to ensure that data is reported consistently and that the data is not only dependable but comparable.

These guidelines are especially important since, this creates a single reporting plan for all payment service providers, including cards, ACH, e-money, and money remittance, for the first time.

Changes Since the Guidelines Were First Introduced

Initially, the directive proposed quarterly reporting of high-level data, which would have required a more detailed set of data on a yearly basis. Instead, the final guidelines impose a single, uniform set of reporting requirements on a semi- annual basis. Also, the directive also no longer requires country-by-country data breakdowns. Finally, fraudulent transactions where the payer is also fraudster is no longer necessary under the final guidelines.

The guidelines are effective, starting Jan. 1, 2019 across the EU and EEA, assuming each national authority agrees. However, the reporting of data linked to the exemptions from the requirement related to the use of strong customer authentication provided for in the Regulatory Technical Standards are effective Sept. 14, 2019.

Payment Service Providers Need to Adapt

Under the new guidelines, PSPs must report its number of fraud cases, the type, and the financial loss suffered. Most PSPs will have to make internal changes to meet these requirements because many are not collecting and archiving all of the data that is required. Also, payment service providers also will need to take the extra step of revising information, for instance, if it recovers any funds as a result of fraud. The best way to handle this may be to use tools that not only assess risk but also collect transaction data.

When It’s Time to Make a Choice

In the end, collecting, evaluating, and disseminating consistent fraud data will help all in the EU payments industry. The best merchant services provider will know how to comply with the latest EU guidelines and understand how to still meet all of its merchants’ needs. When you need dependable credit card processing in the UK, turn to a provider that offers a consultation that includes a review of contracts and fee schedules. This will ensure you have a seamless integration process and a simple and easy application process.