PSD2 Is Coming and Nobody Knows It

Many of you reading the headline will be thinking – yes we do! We are even getting bored of talking about PSD2.

But I’m not talking about us in our payments bubble. I’m talking about the general public.

Small business owners and people in love with their Amazon 1-Click don’t know that PSD2 is about to rock their world, or at least change how they take and make payments.

Last night I went to a local pub and while sipping my Merlot noticed a sign behind the bar “50p surcharge on card payments below £10”. It’s not unusual to see variations of this sign in small businesses, and no one has told them that from January they won’t be able to surcharge.

I spoke to the barman, who turned out to be quite savvy about card payments, but he hadn’t heard of PSD2 and didn’t know that this would happen. His response was that they’d probably stop allowing cards for lower-cost transactions and send customers over the road to the ATM for cash.

If merchant acquirers don’t start talking to their merchants soon about the impact of PSD2, they could lose customers or see a drop off in transactions – and the merchants could end up on the wrong side of the law.

Think about online transactions. We’ve all gotten used to a slick checkout experience — a poor experience leads to basket abandonment. Many merchants already limit or don’t use 3D Secure because it adds friction to the customer journey. The Strong Customer Authentication requirements for PSD2 mean more checks to secure payments, and more checks add friction to the customer journey. No one has told the customers about this, and when they experience difficulty in completing their purchases it’s likely they’ll blame the merchant.

So who IS going to tell the general public about PSD2?

There’s an argument that it’s the role of the regulator to spread the word, and maybe they will. But even with a large-scale PR and advertising campaign, a lot of consumers won’t pay attention until they are at the point of making a payment.

Merchants will need to step up and manage the communications because if they don’t they’ll lose business. Now is the time to think about how you will communicate with your customers. You need to educate them up front, but you also need to communicate with customers within the payments process to keep the journey smooth, the customer happy and your business compliant.