PSD2
Payment Services Directive 2Auth & security
The EU directive (in force since January 2018) that mandates Strong Customer Authentication for most card-not-present transactions and opens up payment-account access to authorised third parties. The basis for SCA, 3DS 2.0 enforcement, and open banking in Europe.
In practice.
PSD2 is the EU law behind SCA: European issuers must decline most online payments that are not authenticated or validly exempt. Merchants feel it as 3DS prompts and soft declines asking for authentication. Exemption strategy, using low-risk and MIT exemptions correctly, is where European approval rates are won.
Related terms: SCA · 3DS 2.0 · Frictionless flow
Auth & security