In Part one of our series on payment performance drivers in the travel and tourism sector, we discussed the 2023 trends in terms of payment journey.
Through this new blog post, we go even further and talk all about frictionless payments under the Payment Services Directive 2 (PSD2) regulation.
Latest developments in PSD2 deployment
PSD2 has applied in 2019 and is still a major topic in 2022, because it mandates strong authentication (SCA) with two factors for all online transactions. Its goal is to prevent fraudulent transactions while guaranteeing a smooth client experience.
The implementation of the new authentication criteria has been gradual, depending on the country. The United Kingdom, for example, is the European Economic Area’s final country to implement PSD2 (since March 14, 2022).
The last milestone in the timeline of SCA implementation was the retirement of 3DSv1 by card schemes on 15 October 2022. As the map below shows, the switch did not majorly impact the card acceptance rate of European countries, as the market was well-prepared.
Source: Payplug figure, Sept-Oct. 2022
How to maintain a frictionless experience
For the tourism sector, the use of exemptions may be limited given the heterogeneous average baskets. With the Transaction Risk Analysis (TRA) exemption, it can only apply to transactions up to €500.
In exchange for taking on the risk of fraud, TRA allows the merchant’s acquirer to exclude some transactions from Strong Customer Authentication. You may use this exemption only if you, the merchant, plus your acquirer maintain a specific fraud rate
Good to know: the latest version of the protocol 3DS v2.2 will enable merchants to maximize frictionless and improve their acceptance rate. Indeed, the Visa scheme allows TRA exemption only with the latest version 2.2.
In Part three, we will explore payment orchestration and its growing use in the digital travel era.
Discover our travel white paper to gain perceptive insights into the prevalent trends and payment performance indicators in 2022: