Artificial intelligence is undoubtedly one of the most highly discussed technology topics at present. You will struggle to find any mass media source which does not contain any reference to machine learning, deep learning or artificial intelligence.
The new regulations concerning strong customer authentication and secure communication (RTS SCA & SC) under PSD II were published by the EU Commission on November 27, 2017. At first glance two points, in particular, come to mind: On the one hand, the requirements have been worded very generally, meaning that applying these rules to concrete payment processes will prove a major challenge to many market participants. On the other, the underlying security paradigms all appear to be inconsistent with one another. Even though these points were continually debated during the long consultation phase – including consultations, public hearings, numerous meetings involving market participants and the European Banking Authority (EBA), the final version of the RTS still does not provide sufficient clarity on the subject.
Internet retail is growing rapidly. E-commerce revenues in the German B2C segment have increased almost fivefold in the past 10 years, which is why online payments are becoming even more important. The success of payment services such as PayPal is largely due to their user-friendliness. Customers are no longer required to enter complicated IBANs, PANs, TANs, BICs, or online banking log-in details, but merely have to remember their email address/username and a password of their choice. A stored biometric identifier can be used instead of a password on mobile devices with a corresponding security element, although providers such as PayPal and Amazon Pay charge a very high price for this level of simplicity. Whereas an incoming payment by bank transfer usually only costs retailers a few cents and payments made on the customer’s credit card generally no more than 90 basis points since the enactment of the MIF Regulation, a PayPal transaction costs retailers (especially smaller ones) up to 1.9% of revenue and fixed costs of at least 35 cents. However, retailers often put up with these costs in order to boost their conversion rate and thus stop as many eager-to-buy customers as possible from abandoning the process at the checkout.