If your clients accept payments in the UK, or within the rest of the EU, the new Payment Services Directive (PSD2) that comes into force this month will affect them. Read on to find out why this legislation is being introduced and the changes your clients need to make.
A new legislation for online payments
The original Payment Services Directive was introduced in 2007 to regulate payment services within the European Union and European Economic Area (EEA). It stipulated which organisations could act as payment providers and established the information that consumers should receive about charges, exchange rates and other details relating to make their payments more transparent.
In recent years, there have been changes to financial transactions because of the surge in online and mobile payments. PSD2 is the updated Payment Services Directive that was introduced in 2016 to take account of these developments. This update will be a legal requirement by 13 January 2018 for all businesses accepting payments from or within the EU, including the UK, Norway, Iceland and Liechtenstein.
Changes introduced in PSD2
The new PSD2 will regulate new services, such as integrated payment APIs, which consumers can use to grant permission to online retailers to access funds from their banks directly.
Additionally, for those with more than one bank account, the PSD2 will regulate the Account Information Service Provider (AISP) whichcan be used to access all financial information in one place.
The new PSD2 means that this and other payment services used by consumers will be protected with stronger authentication processes and better protection against fraud.
Businesses accepting payments via an intermediary API, need to ensure they are providing payment security. Penalties for non-compliance will be severe, at up to 4% of global turnover.
How to become PSD2 compliant
For companies operating within Europe, the opportunities introduced by PSD2 could make a big difference to business – but if you are going to accept payments using a new intermediary API, it’s vital that you can ensure payment security.
AccountsIQ’s cloud accounting software is integrated with a large number of banks through secure connections and is already PSD2 compliant. However, on-premise software may struggle to achieve PSD2 compliance.
Contact us today to discover more about how AccountsIQ can help you comply with the PSD2.