Most likely you are somewhat familiar with the PSD2 regulation (Payment Service Directive) which will come into effect in 2021, but perhaps you still have some questions about its implementation and effect.
Here we have prepared a guide for you:
What does the new PSD2 regulation set out to achieve?
- Reduce fraud in online payments and protect your agency from “chargebacks”, which have reached an alarming level in Europe.
- Open the market to new competitors and reduce the commissions that are charged on online payments.
How will PSD2 regulation be applied?
The new PSD2 regulation requires the application of a reinforced, Strong Customer Authentication (SCA) which will mean, in some cases, extra levels of authentication:
- Something that the user know and is unique to them: The user will have to add a password or a PIN
- Something that belongs to the user: This could be a credit card, a mobile phone, or a device that can perform transactions.
- Something that can identify the user : This could refer to biometrics, like facial recognition or eye scanning.
For the above, as property managers, you do not have to do anything.
The application of SCA and its security protocols will need to be implemented by the payment processors and issuers – the banks, the card issuers (VISA, MC, AMEX etc), and the payment platforms.
Which transactions are affected?
- Transactions made in Europe and which are for European clients (issued only by European banks).
- Online sales in Europe via a website.
One must also take into account the type of transaction since there are exceptions.
More information on these exceptions here.
Note: Charges made by cards which are made manually, still be done so for the time being, but are not recommended due to the lack of security.
One positive change for Property Managers
Having secure payments, not only fosters confidence in your guests, but also vastly reduces the chance of chargebacks.
What happens with offline card charges?
Offline card payments will be considered as “MO/TO” – which means the SCA will not be applicable. This is because the guest is not present during the transaction.
More information on MO/TO here.
The cards which are received from Booking.com, Expedia and Homeaway/VRBO, and other portals that pass you the cards, can be continued to be charged manually. However, these charges, being exempt and therefore outside PSD2 regulation, could still be subject to chargebacks.
Read more on how OTAs are handling PSD2 regulation.
SCA will only be requested in the event that the portal is carrying out the transaction.
Am I covered with the PSD2 regulation using Avantio?
Yes. Avantio is adapted and covers you for the new PSD2 regulation.
In any case, we recommend that you contact your bank and payment processor, who are responsible for applying the double verification authentication, who will themselves be adapted to the legislation.