August 15th, 2019 Update
In light of the EBA's decision to grant individual countries the ability to request an extension to the September 14 deadline for SCA compliance, Zuora is continuing to develop integrations to the gateways as discussed in the July 2019 update. It is Zuora's plan to meet the September 14 deadline.
As of today, CyberSource's 3DS2 solution is in Zuora's production environment and Adyen's is in Zuora's sandbox environment. If you want to enable this feature for your Zuora tenant, contact Zuora Global Support.
Additional documentation for PSD2 and SCA is now available on our Knowledge Center.
July 2019 Update
This community post will help our customers understand the new PSD2 regulation, how it impacts them, and what they need to do to prepare.
What is PSD2 and when does it go into effect?
PSD2 is an extensive revision of the European Union’s “Payment Services Directive” regulations. PSD2 will be going into effect on September 14, 2019. It applies to online transactions where both the issuing and acquiring banks are located in the European Economic Area (EEA).
PSD2 objectives are the following:
- Standardize regulations and integrate the market for payment services across EU countries
- Ensure fair competition and transparency
- Open payment services ecosystem and reduce bank monopoly on providing services by mandating that, upon account holder consent, they make account data available by API to third-party service providers
What is SCA and why is it important?
SCA stands for Strong Customer Authentication and is one of the mandates of PSD2 that is most applicable to Zuora customers in the European Union. The SCA regulations are designed to protect consumers. While many tools exist to reduce fraud, one of the most effective is authentication – validating a customer’s identify before they pay online.
With SCA, all electronic transactions will need authentication, using at least two of three possible methods:
- Knowledge: something only the user knows, such as a password
- Possession: something only the user possesses, such as a token or mobile phone
- Inherence: something the user is, such as a biometric (e.g. fingerprint recognition)
Zuora recommends using 3DS2 (3DS v2) to provide your customers with SCA for European customers. 3DS stands for 3D Secure, an open standard used by major credit card brands to authenticate cardholders. 3DS can dramatically reduce fraud and increase authorisation approvals and is one of the ways for Payment Services Providers to comply with the SCA mandate. Starting September 14, 2019, issuing banks can decline certain payments that require SCA, but have not gone through authentication.
If your merchant account provider is based in the EEA - and you transact with customers in the EEA - you will need to do some work to prepare for this change. If you do not know who your merchant account provider is or where they are located, check with your gateway. For subscription businesses, merchants only have to present the 3DS flow on the initial purchase. Subsequent recurring subscription purchases are generally considered exempt from PSD2 and SCA unless the issuing bank declines the exemption.
3DS vs 3DS2 - what’s the difference and why is it important?
3DS (3DS v1)
3DS2 (3DS v2)
Why is it important?
For payment cards only
Also supports mobile and digital wallets
Greater flexibility and support for mobile e-commerce
Designed for web desktop
Streamlined for mobile interaction models/devices
3DS2 adoption expected to be greater because it is easier to use
Higher false declines
Modified authentication flow
reduces false declines
Customers likelier to abandon transaction or use a different
No merchant opt-out or exceptions
Lower-value transactions exempted from validation, depending on the merchant's fraud rate
Greater flexibility and alignment of the protocol to the risk of a particular transaction
10 data points captured
Up to 150 data points captured
Issuer can make better decisions about the validity of the transaction with more data, preventing both fraudulent transactions as well as false positives
How Zuora is helping you comply with PSD2
Zuora provides seamless integration with your payment gateways, simplifying and automating collections. Zuora plans to integrate to each gateway’s 3DS2 capabilities. If your gateway is compliant and is providing a 3DS2 solution, Zuora intends to integrate to their solution by the September deadline.
Specific Payment Gateway Support for PSD2
Zuora is currently planning to enhance payment gateway integrations that support SCA through 3DS2 in advance of the September 14, 2019, PSD2 deadline. As of July 29, 2019 the following Gateways have provided us with their 3DS2 solution and Zuora is actively developing the integrations:
- Ingenico ePayments
- Ingenico (GlobalCollect) - this will require a migration to Ingenico ePayments for credit cards
- JPMorgan Chase Paymentech Orbital*
*These payment gateways may require a version update, migration or an additional feature to enable 3DS2 functionality; we recommend speaking directly with your gateway contacts as soon as possible.
Zuora is currently not planning to enhance support for the following payment gateways, because they either do not transact in the EEA or they have informed Zuora that they are not applicable to PSD2 (if these gateways do become applicable to PSD2 requirements and they provide Zuora with their 3DS2 integration, Zuora currently plans to provide support for these integrations at a later time):
- Authorize.net (migration to Cybersource required)
- FIS Worldpay (Vantiv and Litle)
- GlobalCollect (will require credit cards to be processed through Ingenico ePayments)
- Merchant eSolutions
- PayPal Adaptive
- PayPal EC1
As part of your comprehensive PSD2-compliant solution, Zuora currently intends to provide the following:
- SCA-compliant implementation of 3DS2 with your 3D Secure gateway
- Hosted Payment Pages updated to support 3DS2, where applicable. Our HPM will redirect to the gateway’s 3D Secure URL, which that service will determine if a challenge question is required. If challenge question fails, payment method will not be stored in Zuora, if it passes, payment method with CAVV and XID to be included with payment request.
- If using direct POST, customer will work with MPI of choice and pass the CAVV and XID via API to Zuora to store with payment method.
What will I have to change in my tenant?
- Update your HPM page configurations
- Note: We will support 3DS2 via embedded iFrame as long as the gateway the customer is using is 3D Secure compliant and is in the list referenced above.
- If you use direct POST support, merchant will need to work with their MPI provider of choice and pass the necessary IDs down to Zuora via API. Zuora will store these and pass it to the gateway via our integration.
- Update your gateway configurations to use a version that supports 3DS2.
- Note: Some integrations may support 3DS2 without requiring an update.
- Note: Some integrations may support 3DS2 without requiring an update.
Additional documention for PSD2 and SCA is now available on our Knowledge Center.
For existing recurring transactions, we will align to the gateway specifications. Details will be provided by the gateways, and Zuora currently plans to provide guidance on any changes required within your tenant. For questions, please post in the comment section below or reach out to your gateway provider directly.
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