Nearly half UK retailers are risking fines and reputational damage by not adhering to PSD2 regulation from the EU, according to new research.

A report from fraud detection and payments specialist Ravelin based on a survey of 1,000 fraud and payments professionals found that a significant number believe that PSD2 legislation, which governs data sharing and electronic payments, doesn’t affect UK retailers.

A total of 42 per cent of UK retailers wrongly think that PSD2 regulation does not affect them, while one in 10 (12 per cent) don’t know at all whether it affects them, with Ravelin suggesting that Brexit may be the cause of the confusion.

European-based retailers seem to have a greater understanding of PSD2, as around two thirds recognise that PSD2 impacts them.

PSD2 was implemented in the UK despite Brexit as it was passed into law before the withdrawal. It helps to make payments safer and reduces fraud because users need to provide additional authentication before making a payment.

The survey found that UK fashion retailers are the most in the dark about the regulation — only a third (33 per cent) think PSD2 will impact them — while UK grocery retailers seem to be the most prepared, with 60 per cent saying they are aware that the regulation affects them.

Ravelin suggested that perhaps as a result of this lack of awareness of the regulation, UK retailers are currently sending less web traffic to 3DS, an additional security layer for online payments, than US or European retailers.

Only 35 per cent of UK retailers are sending traffic to 3DS more than 40 per cent of the time, compared with 55 per cent of US and EU retailers.

Commenting on the findings, Mairtin O’Riada, co-founder and CIO at Ravelin said: “These massive divides in PSD2 understanding between retail industry verticals and between the UK versus Europe are worrying. Perhaps payment service providers are not doing enough to educate business owners affected.

“Regulation around payment security is only likely to get more stringent over time as the world’s reliance on e-commerce increases, so it’s imperative retailers are able to strike a balance between security and a seamless payment experience for customers.”

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