Major UK retailers are way off the pace when it comes to the Second Payment Services Directive (PSD2), set to go live on 13th January, according to research from technical consultancy Consult Hyperion and PR outfit CCgroup.
‘Unaware, unprepared and paralysed: retailer readiness for PSD2’ is based on responses from over 30 tier one and tier two retailers. It found that 48% are unaware of PSD2, 67% aren’t ready to comply with it and 32% aren’t aware of the effect on their business. Only 16% are seeking to ‘take advantage’ of the new regulation. 67% of retailers don’t think PSD2 will have much of an impact. On average only a third of retailers can confirm they’ll take action, whilst around 10% aren’t sure what they have planned. However, once PSD2 is explained to them, 94% would like to reduce card fees and 74% want to cut the impact of fraud and data breaches.
“The impending shift to Open Banking through the implementation of PSD2 is one of the hottest issues in banking and payments. However, it seems that merchants and the wider retail technology community are unaware of the regulation and its far-reaching ramifications,” says Tim Richards, Principal Consultant at Consult Hyperion and co-author of the report. “The use of two-factor authentication and access to customer bank accounts will allow retailers to dramatically lower card fees, mitigate fraud and limit the scope of data breaches. But arguably the biggest value is in access to consumer financial data that opens up new ways to do business. With internet players like Amazon already investing in PSD2 related capabilities, if retailers don’t take up the charge, then someone else will.”
“There is clearly a knowledge vacuum within retailers around PSD2 and the retail technology solutions available that enable merchants to take advantage of the opportunities it offers,” comments Daniel Lowther, Head of FinTech at CCgroup and co-author of the report. “There is a window of opportunity for retail technology vendors to help merchants react to PSD2, while helping themselves win new business. But this window will close fast and current levels of awareness suggest that communications and marketing efforts to date have not resonated with merchants. This needs rapid and urgent attention from CMOs at retail technology vendors.”