What is PSD2 fraud prevention?
The trend of online payments is increasing as the days are passing by. It is an advancement for the people in today’s date. With the help of online payments or transactions, you do not have to stand in a long queue or go out of your home.
But some people still have doubts regarding the online payments or mobile payments procedure. As many cases involve fraudulent activities and more. Hence, for such reasons PSD2 fraud prevention is getting a lot of hype.
Therefore, today we will discuss more what is PSD2 fraud prevention and how to do it.
What is PSD2 fraud prevention?
The term PSD2 stands for second payment service directive. It takes its origin with the help of the EU (European Union). Such initiatives have been done by the European Union to make the levels of modern banking safe and reliable. We are all aware of the fact that there are several occasions where a customer cannot trust blindly over such networks.
Hence, the second payment service directive has been launched to hinder such factors and build a consumer-friendly modern banking solution. Moreover, to ace such goals PSD2 has known to lay out proper guidelines that have to be followed by banks. The main requirements to fulfill and include are
- - Creation of APIs (Application programming interface).
- - Launching of two-factor authentication (2FA) procedures.
- - Using multi factor authentication (MFA) services.
This might be an old security system but the European Union has made it a legal topic that has to be fulfilled at every cost.
What are the main goals of PSD2 fraud prevention?
The main goal of the second payment service directive is to contribute to more and enhance European payment services. It also requires meeting the ends for increasing the competition for making the payment procedure much safer and more reliable. Moreover, the PSD2 needs to be complied with by every financial organization that mainly provides online payment services.
How to do the PSD2 fraud prevention?
As complying with the PSD2 is essential under the legal notice and rules of the European Union banks are now wondering how to imply it in a short time or how it can be done for the prevention of fraud.
Some ways in which the modern banking systems can follow the PSD2 fraud prevention are mentioned in detail below.
- Initiation of the consumer identity
The foremost thing to do while setting up the PSD2 is to set up the consumer identity procedure. This can be done by asking questions about the consumer that is only known to them. Which in turn can be a safe way to prevent access for attempting fake or fraudulent money transactions over a network.
- Two-factor authentication procedures
The other way in which modern banking systems can induce PSD2 for fraud prevention is to launch the two-factor authentication system. It means the banks or the financial service providers must take the thumbprints of the person. Taking thumb impressions is a very safe way to lower down the threats of fraud during your prevention.
- Ask your customers to create passwords and credentials
It is important to play safe especially when it comes to online payments or money transactions. You never know when or where someone is trying to log into your system. Therefore, as an organization, you should be able to lay out a scheme where you can ask the consumers to create strong and authentic passwords.
Having a strong and unique password to your system protects your account from money fraud, especially during your online payments.
- Build a user consent application
The next way in which the second payment service directive can be introduced is to make sure to build a system by setting a user consent application. In this, you can add additional points that every online payment or transaction that was made by the other end is on the consumer’s own decision. Secondly, the modern banking systems can also add the fine control of providing access to the customers.
Conclusion
The second payment service directive (PSD2) is a great way initiated by the European Union to prevent online fraud. If you are looking for more details about it and how to do it then make sure to read the mentioned information.
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