The Impact of PSD2 on European B2C E-Commerce and Online Payment 2019 code:1461

The Impact of PSD2 on European B2C E-Commerce and Online Payment 2019
OVERVIEW
TABLE OF CONTENTS
COMPANIES MENTIONED
Countries Covered: France, Germany, Italy, Netherlands, Spain, UK
Pages: 76
Publication Date: 13/11/2019
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Questions Covered in the report:
  • How is the European E-Commerce payments landscape expected to transform as a result of PSD2?
  • What are the main implications of PSD2 of the online payment mix in Europe?
  • How is Strong Customer Authentication expected to influence the conversion rate in the short term?
  • How aware are consumers in different countries in the EU of the PSD2 requirements?
  • What are retailers' expectations with regard to PSD2?

Key findings:

European E-Commerce Payments Landscape Transforming Under PSD2

PSD2’s main provisions for E-Commerce payments

The second Payment Services Directive (PSD2) modernizes the payments market regulations in the European Economic Area (EEA), aiming to protect consumers, make online payments more secure and encourage competition and innovation. The key provisions of the directive, including Strong Customer Authentication (SCA) and Access to Account (XS2A) are reshaping the E-Commerce payments landscape in Europe and are expected to have a major impact on the market’s development in both the short and the long term, as the yStats.com report reveals.

The impact of SCA on E-Commerce conversion rates

The effects of the SCA requirements that entered into force in September 2019 with a prolonged implementation period until the end of 2020, are expected to be especially felt in the near term. While the main purpose of the new rules is to strengthen the security of online shopping transactions amidst the growing threat of card not present fraud, industry participants have voiced a concern over the potential negative implications of SCA on the conversion rates at online shops. Close to one-third of consumers would abandon an online purchase and complete it elsewhere when faced with a request for a two-factor verification under SCA, according to a recent survey cited by yStats.com. Payment providers also expect a multi-fold increase in both step-up verification requests and transaction rejections as a result of SCA. In order to mitigate these effects, merchants are advised to apply Transaction Risk Analysis (TRA), adopt the new 3D Secure 2 protocol for card payments and offer alternative payment methods to their customers.

Access to accounts to shake up the E-Commerce payments mix

Besides addressing the security of E-Commerce transactions, PSD2 also opened up the European payments market to new players in the face of Third Party Payment Providers (TPPs), requiring account providers such as banks to allow TPPs accessing the accounts on their customers’ behalf, known as Access to Account or XS2A. These provisions are expected to intensify competition, drive innovation and stimulate the emergence of new payment services in the long term. The E-Commerce payments mix in Europe is also expected to change as a result, with the cards’ share declining, and alternative payment methods rising.

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1. Management Summary

2. Regional Developments

  • Overview of the Impact of PSD2 on E-Commerce, October 2019
  • B2C E-Commerce Sales in Europe, in EUR billion, and Year-on-Year Change, in %, 2013 – 2019f
  • Breakdown of E-Commerce Transactions by Payment Method, in %, 2018
  • Breakdown of E-Commerce Spending in the EU by Payment Method Considering PSD2 and Instant Payment Introduction, in %, 2012, 2017, 2020f, 2022f, 2027f
  • Share of Retailers Who Believe That Their Online Customers are Aware of PSD2, in %, by Germany, France, Spain, the UK and Total, October 2019
  • Share of Consumers Unaware of PSD2, in %, by Germany, France, Spain, the UK and Total, October 2019
  • Overview of The Strong Customer Authentication Requirements Under PSD2, October 2019
  • Overview of The Strong Customer Authentication Perceptions by Industry Participants, June 2019
  • E-Commerce Merchants’ Readiness to Support Strong Customer Authentication, in %, November 2018
  • Levels of Awareness and Preparation of E-Commerce Merchants to Strong Customer Authentication Requirements, by SMEs and Large Businesses, June 2019
  • Share of Consumers Who Would Cancel Their Online Purchase and Buy Elsewhere if Faced with PSD2 Authentication Requirements, in %, by Germany, France, Spain, the UK and Total, October 2019
  • Share of Retailers Who Have Not Taken Any Measures to Minimize the Negative Impact of PSD2 on Their E-Commerce Sales, in %, by Germany, France, Spain, the UK and Total, October 2019
  • Share of Consumers Who Are Unaware of the Strong Customer Authentication Requirements for Online Purchases, in %, April 2019
  • Recommended Measures to Mitigate Conversion Risks Due to SCA in E-Commerce, March 2019
  • Preferred Authentication Methods, by Most Secure and Best Experience, in % of Online Shoppers, April 2019
  • Share of E-Commerce Merchants Unfamiliar With 3D Secure 2, in %, and Breakdown of Expected Timeline of Implementing 3D Secure 2, in % of E-Commerce Merchants Familiar With It, in %, April 2019
  • Share of E-Commerce Merchants Who Believe that SCA Will Boost the Importance of Payments as a Competitive Differentiator, in %, April 2019
  • Share of E-Commerce Merchants Who Plan to Manage SCA Exemptions Completely In-House, in %, April 2019
  • Overview of Expected Impact of Strong Customer Authentication (SCA) on Merchant Chargebacks in Remote Payments, by Chargeback Type, September 2019
  • Share of Online Shoppers in Selected EU Countries Who Would be Likely to Pay by Direct Debit if More Businesses Offered a Subscription Option for a Regular Purchase to Avoid Complex or Lengthy Checkout, in %, June 2019
  • Share of Banks Who Met the March 2019 Deadline for Providing a “Sandbox” for Third-Party Payment Providers Under PSD2, by Selected Countries, in %, March 2019
  • Number of Licenses Issued to Third-Party Providers (TPPs) Under PSD2, by Account Information Service Providers (AISP) and Payment Initiation Service Providers (PISP), and Combined (AIS/PIS), by Country, August 2019
  • Breakdown of Service Offerings of TPPs Enabled By the PSD2 License, in %, by B2C and B2B Customer Segments, August 2019
  • Use Cases Emerging Under PSD2 and Open Banking Focused on Customers, in %, July 2017
  • Use Cases Emerging Under PSD2 and Open Banking Focused on Businesses, in %, January 2019
  • Breakdown of Consumers’ Awareness of Financial Providers’ Ability to Access Their Financial Information Held by Other Companies, in %, by Selected Countries, February 2019
  • Breakdown of Consumers Being Happy About Financial Providers Sharing Their Financial Data With Other Companies If They Gave Consent, in %, by Selected Countries, February 2019

3. UK

  • Current and Expected Share of Step-Up Requests and Declines as a Result of SCA Without a Roadmap, in % of E-Commerce Transactions, May 2019
  • Breakdown of Online Shoppers by Perceiving Security or Convenience as the Most Important Factor When Paying for Something Online, in %, June 2019
  • Breakdown of Online Shoppers’ Feelings Towards Complex Payment Security Processes, in %, June 2019
  • Breakdown of Online Shoppers’ Attitude Towards a Brand Changing Its Payment Process to be More Secure, but Less Convenient, by Favorite Brand and New Brand, in %, June 2019
  • Breakdown of Tier-1 and Tier-2 Retailers’ Awareness of PSD2 and Readiness to Comply with PSD2, in %, 2018
  • Actions That Tier-1 and Tier-2 Retailers Are Ready to Take as a Result of PSD2 Regulation, in %, 2018
  • Concerns of Tier-1 and Tier-2 Retailers Over PSD2, in %, 2018

4. Germany

  • Breakdown of Online Shoppers by Perceiving Security or Convenience as the Most Important Factor When Paying for Something Online, in %, June 2019
  • Breakdown of Online Shoppers’ Attitude Towards a Brand Changing Its Payment Process to be More Secure, but Less Convenient, by Favorite Brand and New Brand, in %, June 2019
  • Breakdown of Awareness of PSD2, in % of Internet Users, August 2019
  • Organizations Which Internet Users Would Trust to Access Their Bank Data, in %, August 2019
  • Breakdown of Importance of Payment Topics in Merchants’ Payment Strategy Until 2020, in % of E-Commerce Merchants, 2018
  • Expected Impact of 2-Factor Authentication, in % of E-Commerce Merchants, 2019
  • Breakdown of Usage of 3D Secure for Credit Card Payments, in % of E-Commerce Sellers, 2017 – 2019
  • Breakdown of the Perceived Change in Shopping Cart Abandonment Rates After Choosing Credit Card Payment as a Result of 3D Secure,  in % of E-Commerce Sellers Using 3D Secure, 2019

5. France

  • Breakdown of Online Shoppers by Perceiving Security or Convenience as the Most Important Factor When Paying for Something Online, in %, June 2019
  • Breakdown of Online Shoppers’ Feelings Towards Complex Security Processes, in %, June 2019
  • Breakdown of Online Shoppers’ Attitude Towards a Brand Changing Its Payment Process to be More Secure, but Less Convenient, by Favorite Brand and New Brand, in %, June 2019

6. Spain

  • Breakdown of Online Shoppers by Perceiving Security or Convenience as the Most Important Factor When Paying for Something Online, in %, June 2019
  • Breakdown of Online Shoppers’ Attitude Towards a Brand Changing Its Payment Process to be More Secure, but Less Convenient, by Favorite Brand and New Brand, in %, June 2019

7. Italy

  • Share of Consumers Aware of The Term ‘PSD2’, in %, October 2019

8. Netherlands

  • Share of Consumers Familiar with PSD2, in %, January 2019
  • Share of Consumers Who Are Open to Using New Payment Services That Will Become Available as a Result of PSD2, in %, January 2019
  • New Payment Services Enabled by PSD2 That Consumers Would Be Open to Use, in %, January 2019

9. Nordics

  • Share of Consumers Aware of PSD2 and Its Account Information or Payment Initiation Services, in %, April 2019
  • Share of Consumers Who See At Least Some Risks in Sharing Their Bank Account Information Or Allowing To Initiate Payments, in %, April 2019
Read More
  • Alphabet Inc.
  • Amazon.com Inc
  • MasterCard Inc.
  • PayPal Holdings Inc
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