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Data for today’s episode is provided by Mercator Advisory Group’s report – No Holiday for the Regulator During the Pandemic
Regulatory Updates: Strong Customer Authentication & Interchange Fee Reform
- PSD2’s most important impact on e-commerce merchants is the requirement for Strong Customer Authentication.
- This requires two-factor authentication (3D Secure being the most widely applied) on many payments over €30 that start and end in the European Economic Area (EEA).
- While some commercial cards are eligible for exemption (virtual and lodged cards), standard corporate and purchasing cards are not.
- Therefore, Mercator expects many more companies to move towards centrally billed card payments, including lodged cards and virtual cards.
- Interchange Fee Reform: The major concern going into 2020 was the eventual ruling on Article 17 of the IFR, which required a reevaluation of the commercial cards’ exclusion by June 2019.
- The required follow up study found that there is no statistical evidence that commercial cards have been substituted for consumer cards due to the higher interchange levels.
- This finding suggests that the exemptions for centrally-billed commercial card interchange will remain in place.
In the midst of COVID-19, corporate banks must still deal with regulations as a fact of life. Market realities co-exist with compliance requirements as they are often indistinguishable, such as in the case of open banking.
In this Viewpoint, No Holiday for the Regulator During the Pandemic, Mercator Advisory Group provides an update on some of the more high profile regulatory conditions across the globe that relate to corporate banking and payments. Financial services institutions are in the most highly scrutinized of industries, given their role as global liquidity providers and their responsibility to keep the financial system safe and sound.