A journey in ProcessOut's flight journal

PSD2, 3DS2 and how to (really) prepare for it.

by Manuel Huez on

The payment market is going through a huge shift with the new PDS2 regulations, especially with the introduction of 3DS2. It can be hard to navigate through all the news and changes, so let’s dive in!

1- A bit of context about 3DS2

The European market is currently experiencing one of its biggest changes since its last regulations. The new directives impact many different aspects of payments, banking, and security, and it can be tough to navigate through it. If you’re new to the subject, there are some great articles about it made by Braintree, Stripe or Checkout.

Fortunately, the European Commission has given deadlines to give some clarity into what will happen, when, and the impact it should have on merchants and customers (end-users actually paying). To that effect, we already know that in April 2019, PSPs were supposed to start exposing APIs to support the new 3DS2 flows and that banks should’ve started supporting the new protocol for their users in the following weeks, for a final deployment live for everyone on September 2019.

Thanks to these, most PSPs have also already started to talk about their take on 3DS2, what they think will happen on the market, how merchants should react, etc. However, with that raised a new kind of problem: the messages given on the market are extremely sparse, some stating all banks will be ready, others saying none will, and others talking about their 3DS2 support and how they won’t be ready on September but that it’s a good thing. These questions can also become very local as local card networks come into play: for example in France, the most used card network isn’t Visa or Mastercard but Carte Bancaire, who operates yet another network with different specifications, rules, and timelines.

As a merchant, navigating all these different information is confusing and time-consuming: you expect your payments to keep working as they used to once the new regulations come into effect, but you can’t talk to every single payment actor in the chain to keep up with the changes and get the real information you need.

2- How ProcessOut helps you be ready (even when your PSPs aren’t)

ProcessOut is a monitoring and Smart-Routing solution for online merchants. Although we work a bit like your usual PSPs (by exposing a dashboard and a suite of payments APIs), we greatly differ from them on one critical point: we don’t take parties within the payments ecosystem and we’re fully agnostic, only dealing with the tech, data and knowledge subjects. By acting like your (or part of your) internal Payment Team, we’re in a unique position to always act in your best interest. Consider ProcessOut as a Payment Orchestration Platform, that enables you to develop, monitor and optimize your payment infrastructure but doesn’t touch the money.

The PSD2 and the new 3DS2 are great examples of these: for the past year (and even more!) we worked closely with acquirers (the banks that process your payments behind the scenes), card schemes (like Visa, Mastercard, or local ones like Carte Bancaire) and issuers (the bank of your users) about the impact of 3DS2 so our merchants didn’t have to. Because we act as a technical layer, we’re not subject to most complexities related to the regulations and can rather act upon them as soon as they come out; but because we’re also connected to a network of great merchants (in France, we work with 5 of the top 10 online merchants), we can also leverage this network to impact the implementations of the new regulations and truly talk in the name of our merchants, which we’re really able to do only because of our agnostic character.

As such, we’ve replicated the core technology we use to integrate new PSPs, standardizing and normalizing these so our Payments Engineers team can integrate new PSPs and 3DS2 flows in a matter of days instead of weeks or months, whenever a merchant requires a new one to be added on the platform. Are you working with several PSPs but some don’t support the new protocols? This is no issue and a common use-case, ProcessOut allows you to leverage the ones that are ready, and once the others get on the same level the switch will be transparent for you!


3- What vision you should have on payments post PSD2

With the 3DS2 subject taken care of, merchants are now facing a new kind of question as well: exemptions and their optimizations. As a merchant, you already know that working with several acquirers helps you optimize the performance of your payments, as authorizations are always seen differently by issuing banks depending on the merchant accounts used. (read more about it in our other blog articles: The secret life of a transaction)

With the PSD2 and the new 3DS version, a new shift is happening: exemptions can be requested at the acquirer level, but also at the 3DS Server directly (the service that handles the 3DS authentication protocols). Because 3DS2 now allows 3DS authentication tokens to be acquirer agnostic and portable, a new kind of service is rising in the market: 3DS Server Providers.

Acquirers and these new services hold a key piece in your payment optimizations: they allow you to avoid having to authenticate your users and drop conversion rates. It’s therefore extremely important to deal with the best actors to ensure you always get the best performance for all your transactions.

Because ProcessOut is acquirer, PSP, and now 3DS Server Provider agnostic, our merchants can leverage the optimizations and connections of all the providers they want to work with, without having to integrate each one individually. ProcessOut can also retry exemption requests if the first tried 3DS Server Provider or Acquirer refuses it so you never miss any potential sale. With one API, ProcessOut gives you access to 60+ payment connectors, including PSPs, acquirers and 3DS server allowing you to optimize your authorizations and exemptions. And if we don’t have the ones you want, talk to us! We add new ones every day depending on our merchants’ demand!