As of 31 December 2020, all companies in the EU must comply with the regulatory technical standards (RTS) related to Directive (EU) 2015/2366 (PSD2). The new regulations significantly change the way payment services operate in Europe and are intended to stimulate competition and consumer choice with respect to payment service providers.
Simply put, payment integrations will need to authenticate the customer before making a payment. Otherwise, the payment transaction will be rejected by the customer’s credit card issuing bank. The most common way to do this is to use the 3D Secure model, which is a security protocol that provides an additional layer of protection when making online purchases with credit/debit/prepaid cards.
Every time a customer makes a payment, 3DS2 allows payment service providers to send over 100 data elements (such as customer shipping address, device ID, and payment history) to the cardholder's bank to assess the level of risk. And it all happens behind the scenes during the web or mobile checkout process.
Based on this data, the customer's bank will then decide to immediately authenticate the payment (frictionless flow) or request additional information before authenticating the payment (challenge flow).
Our 3DS2 solution
Here's what the new payment workflow looks like for Reply and Chargebee, our payment service provider.
When adding payment method information, the issuing bank may request 3DS verification (e.g. code, fingerprint, phone call, or any other means): If your issuing bank can authenticate you based on the data you provided, no further actions are required and the transaction will go through a normal flow.
When your card has already been added and the issuing bank requests 3DS verification for a new transaction that fails because you are not aware of it: Then we will send you an email where you can choose to pay now and you will be redirected to the Chargebee page to proceed with 3DS verification.
Note: By default, the payment due date is set to 7 days. After this time, your Reply subscription will be suspended and must be manually reactivated.
For more details about Chargebee 3DS workflows, please refer to this article.
Can we help?
If you need help or have a question about the new regulations, message our support team via live chat or at support@reply.io.