Online travel agencies say they are prepared for new anti-fraud online payment rules but warn it could be ‘painful’ and a ‘learning curve’ for consumers.
Phase two of Europe’s Second Payment Services Directive (PSD2) comes into force on September 14, imposing new verification requirements for any payments made online of £30 or more.
Travel Republic will be compliant from this month for the change in the autumn.
Managing director Frank Rejwan admitted it would be a “slightly more painful process” but did not predict any major problems when the rules kick in.
He said: “We are not relaxed about it, we are just ready; we are all over it. It protects us but also protects customers. At the end of the day this is a good thing and businesses need to be ready.”
He added: “This is a European wide initiative not specific to travel businesses so it affects the entire market. I can’t see the banks failing loads of transactions, that would bring the economy down.”
On the Beach also said it was prepared for the change, but warned of a “learning curve” for customers to get used to the new payment processes.
Head of technical product Blake Carroll Fulford-Brown said: “PSD2 will provide consumers with greater security and purchasing confidence online, whilst also giving businesses greater protection against fraudulent activity and we welcome the new regulation.
“The regulation will, however bring about significant changes in terms of how we all go about making online payments, and that may well bring with it something of a learning curve for consumers as they become familiar with the new authentication process.”
He stressed the onus would be on banks to educate customers on the new payment security rules to make the process “as seamless as possible”.
He added: “On the Beach has been working closely with our strategic payment partners to prepare for and mitigate against any risks, and will also be communicating with our customers to ensure a smooth implementation come September.“
Meanwhile, Rejwan downplayed fears the new rules would result in lost bookings and revenue, pointing out holidaymakers can book on the phone too.
He said: “If customers have gone through the process of choosing and selecting a product they want, this is at the end of the process, so to abandon the [shopping] cart is probably going to be as painful a decision to take as not.
“We have around 70 people in our sales team for customers at that point so they can phone anyway to pay.”
The new verification rules, or Strong Customer Authentication (SCA), extends the principle of two-factor authentication which already exists for card-present, chip-and-pin transactions to e-commerce.
It means consumers will need a mobile phone when making online payments, with secondary verification made via a bank’s app, use of a phone with a fingerprint password or by entering a code sent to the mobile.
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