PCM vol. 3 Issue 9

PAYMENT COLLECTIVE
PSD2: Challenges & Opportunities from a
Merchant PoV
In this month’s Payment Collective we interviewed Andreas
Schulze, who is the Director of Payments at Gameforge. He
points out how PSD2s is influencing the industry from a
Merchant PoV. Moreover, Andreas shares some advice on
how to keep up with the changes.
PCM: Tell us a bit more about yourself (your background and
what has led you to pay-ments & Gameforge specifically)?
Andreas: I currently own the position “Director of Payments”
at Gameforge 4D GmbH. In this role I am responsible, endto-end,
for Gameforge’s payment services, online shops and
our anti-fraud ecosystem, which covers ninety countries,
fifty languages and 100+ payment methods worldwide. Our
payment portfolio is based on 40+ payment and anti-fraud
service provider partnerships. During my 16 years in the
payments industry, I primarily worked in strategic product
management roles for companies like First Data Interna-tional,
Qpass (now Amdocs), debitel and 1&1.
PCM: What impact will the EBA Regulatory Technical
Standards on Strong Consumer Au-thentication (SCA) have
on retail payments (the payments ecosystem in Europe) in
your opinion?
Andreas: PSPs (Payment Service Providers) and PISPs (Payment
Initiation Service Providers) will have to develop SCA (Strong
Consumer Authentication) strategies, which in the end will
enable customers to choose their preferred way to authenticate.
This will be the key for the service providers to maximize user
acceptance and to be competitive.
Depending on how SCA will be accepted by the users, offering
non-SCA payments may become a competitive advantage.
TRA (Transaction Risk Analysis) as a measure to reduce fraud
and therefore to achieve exemption from SCA will increase
the costs of PSPs, at least due to EBA fraud reporting and
audit requirements. However, it will also create new revenue
opportunities, e.g. new anti-fraud services for merchants.
The same applies to anti-fraud services or solu-tion providers.
On the other hand, in most cases merchants will have to pay to
benefit from these services i.e. if they want to further reduce
fraud to fulfill the RTS SCA ex-emption requirements and at the
same time carefully apply the anti-fraud measures to prevent
an increase of their false positive volume.
a value less than 30€ - at least temporarily.
PCM: The second Payment Service Directive (PSD2) is
a fundamental piece of payments-related legislation in
Europe. What are the main opportunities and challenges
from a merchant point of view?
Andreas: In terms of opportunities, competition will get
tougher in the payment services industry caused by new
players entering the market, especially new PISPs, who will
drive lower merchant payment costs because card payments
will lose relevance and therefore the amount of acquirer and
scheme fees to be paid, will decrease.
Due to the low fraud risk in bank-to-bank money transfers,
costs related to fraud and chargebacks will decline if users
switch to these payment methods offered by PISPs.
It will also push the innovation of more user-friendly payment
funnels and user authen-tication options.
If we finally add instant payments, PSIPs are an even harder
challenge for the payment cards industry, since funding risks
for merchants will be reduced to almost zero.
The past has already shown that whenever new PSIPs enter a
market, they quickly gain market share, while card payments
show decline in growth.
As for Challenges, in the future, there we will see numerous
new players in the market. As a result, the risk of selecting the
wrong service provider will increase.
The higher complexity from a service offering, fees structure
and market coverage per-spective requires increased efforts
for screening and evaluating PSPs/PSIPs to mitigate the risk.
Since the SCA strategies of merchants will differ, users will
ask “why do I have to pass a SCA procedure for merchant A but
not for merchant B”, so customers might switch their merchant
of choice.
Subscription service revenues will suffer from too strict
recurring transactions regula-tion and the related cumbersome
procedures users have to pass.
The exemption from SCA for “Low Value Transactions” may
require new pricing strate-gies e.g. for digital goods merchants,
since these customers might tend to preferably buy carts with
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