In an effort to thwart the surge in cybercrime and various other forms of online fraud, the European Banking Authority has announced that internet-based payment service providers will be required to improve their general security procedures by August of 2015. As a follow-up to this statement, the EBA has published a series of ‘minimum security guidelines’ that must be met by payment service providers in each of the EU’s 28 member states.
Examples of these reforms include a new mandate which states that these service providers improve the verification standards present in their systems in order to ensure that customers are properly authenticated before carrying out their payment. Additionally, the EU has announced that they will be revising their Payment Services Directive in order to improve the general consumer experience as well as provide a more secure and competitive environment in which payment service providers will be compelled to enhance their services in order to maintain a positive relationship with their customers. These new guidelines will likely be initiated in 2017.
It seems as if the EU’s efforts to thwart online fraud and misuse of money transfer software could not have come at a better time. In 2014 alone, the losses created by money transfer software was approximately $975 million dollars, a 21% increase over the previous year.
Whether or not these new guidelines will truly make the positive impact outlined by the European Banking Authority has yet to be seen. What is likely, however, is that the topic of cybersecurity and cybercrime prevention will become much more commonplace than it is now which is, in itself, a huge step forward for the European Union. As evidenced by the recent £650 theft allegedly perpetrated by Russian hackers, there is a massive need for online security reform. The damage caused by these crimes is very real and is likely to pose a serious threat to future EU growth unless it is confronted now.
More information concerning the outcomes of this legislation, as well as coverage of the reforms being outlined to the Payment Services Directive, is likely to be offered in the upcoming months.