The landscape of payment processing is changing all the time as technology, regulation and illegal activity evolve in parallel. So, what should your business be focused on in the new year ahead? Here are three key developments that could affect your organisation and the way that you store and process financial information in 2018.
The arrival of PSD2
The EU Payment Services Directive (PSD2) will come into effect on January 13, 2018, and is one of the most significant EU law changes in recent years. It will require banks to provide third-party providers with access to payment data, which is intended to bring the banking industry in line with the digital revolution in financial payment processing. It should lead to increased competition and give a boost to the arrival of new players in the industry.
Increased competition is good news for consumers, but it is likely to mean that businesses will have to deal with a new range of payment initiators and banking companies, along with new technical solutions designed to make financial payments easier for customers. Keeping up to date with these changes and adapting to a rapidly changing marketplace for financial processing services will be a key challenge for businesses in 2018.
Say hello to GDPR
General Data Protection Regulation (GDPR) is another new piece of EU law that businesses can’t afford to overlook next year. It comes into effect on May 25, 2018, and will replace the Data Protection Directive of 1995, which has become outdated.
GDPR will place a number of obligations on businesses. For a start, data protection must be incorporated into every step of interaction with the customer. Multinational companies will have to employ a Data Protection Officer who will be responsible for ensuring GDPR compliance. All personal data must be erased within a month if the client requests it and clear consent has to be given before your business can collect or process personal data.
No business can afford to ignore the impact of GDPR, not least because of the potential fines. While a first accidental breach of the regulations will result in a warning, subsequent failures can be penalised at up to 4% of a business’s annual global turnover.
The march of technology
Paradoxically, as players in the financial payment industry are becoming more connected and collaborative thanks to technological advances, the risk of cyber-attack and fraud is likely to continue to grow. In recent months there have been a number of high profile security failures that have led to the leakage of financial information and considerable negative publicity.
To address these challenges, the financial technology industry will push ahead with a range of new technologies in 2018. Not all of these will impact your business immediately, but change is coming. Multifactor authentication, biometrics, digital identity, geo-location and interoperable cryptographic keys are just some of the new technologies likely to be developed further. These developments will shape the retail market and change customer expectation, so businesses will have to be up to date and ready to respond.
December 20, 2017