'Europe risks becoming a walled garden of commerce,' warn payment risk experts


The Chargeback Company has warned of the threat of eCommerce isolationism brought on by new legislation in Europe: the Digital Single Market, the Revised Payment Services Directive, and the General Data Protection Regulation.

Created by Monica Eaton-Cardone, co-founder of The Chargeback Company, and in collaboration with PiPL, ACI Worldwide, Kount and the Emerging Payments Association, the latest white paper addresses the potential commerce "walled garden" cause and effect of reformed regulations, and the changes businesses can expect, both inside and outside of Europe.

Eaton-Cardone explains, "For those based outside of the EU, European consumers may be made untouchable due to the cost of compliance, privacy and competition. Understanding that security is a top priority and restricting commerce may come as an unintended, much larger, consequence."

The initiatives come into play over the next few months. With little time left to act, many claim the combination of competing regulations has gone too far.

Experts agree that constructing digital walls incites fear and may cement eCommerce isolationism. While it is estimated that 75 percent of the potential economic benefits from the digital transformation will be felt by Europe's industries, benefits may fall short for retailers outside the region. Increased security protocols should work to support trading sustainability and growth. But, by restricting movements that have facilitated success in other markets, the reverse may be an undesired result.

Demand for innovation

The growing polarisation for new payment and commerce choices between millennials and baby boomers is resulting in a move towards innovative friction-free payments over traditional methods – a significant shift favouring speed over security concerns.

Fear regarding transaction security or potential fraud among consumers appears to be more focused, with concerns mainly centred on privacy, Payment Initiation Service Providers (PISPs) and third-parties. Nonetheless, a survey of the UK public found the majority of consumers (53 percent) maintain they are comfortable with PISPs, whilst a staggering 70 percent would not trust third-parties.

The demand for innovation supersedes consumer education as barriers between safety and speed begin to fade. But new entries into the payment world could mean an increase in transaction disputes and subsequent chargeback activity.

Already a focus for concern, chargebacks for online transactions in the UK have surged by 20 percent, despite card-not-present activity increasing by just 7.5 percent.

"One of society's greatest threats doubles as a market maker," explains Eaton-Cardone. "Social networks take news to the next level – whether it's beneficial or detrimental. When it comes to consumer behaviour, a re-education process is required. Regulations will help, but without a more standardised approach to consumer schooling, this trajectory is dim."

With better understanding, business owners can leverage the changing legislation to their advantage. Knowledge about the facts and, most importantly, the effects could not be more relevant for stakeholders and retailers alike.

This regulatory shift will affect businesses around the world. In the new whitepaper, The Chargeback Company, working with leading fraud solutions, payment technology experts, and SME use cases, aims to explain how.

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