The RTS should seek to provide a tighter identification of the types of customer online account interactions that require PSPs to apply SCA.
The existing PSD2 text references to:
• “Accesses its payment account online” [Article 97(1)a] and,
• “Any action, through a remote channel, which may imply a risk of payment fraud or other abuses” [Article 97(1)c]
provide a very loose characterisation of payer online account interactions that can be interpeted to encompass the majority of such interactions even when no sensitive payment data or PSC are exposed.
Interactions between AI-PSPs and AS-PSPs that involve the exposure and re-use of payment service user PSCs (originally established & delivered by the AS-PSP to the PSU) can give rise to risk of compromise of such credentials if the communication channel is not secure. These credentials may subsequently be used to obtain unauthorised access to the AS-PSP account.
Additionally, interactions between TPPs and AS-PSPs that impede the ability of the latter to perform their standard Fraud Monitoring (for example, due to the lack of payee information) may give rise to increased risks of fraud.
Changes to some payment account settings (e.g. account thresholds, contact details, payee whitelists) can give rise to additional fraud risk and should be covered by the requirement to complete SCA.
Many online account access interactions (i) do not expose sensitive payment data/ PSC and (ii) cannot be used to alter existing account settings; thus, they do not give rise to payment fraud risks.
They should be excluded from the requirement to carry out SCA and listed as an example in the low-risk transaction SCA exemption category (see Comment under Question 7, below).
“Possession”-based authentication elements that can only be used/accessed under the control of the legitimate PSU should be eligible for use to complete SCA.
Such elements may be physical (PIN Pad, mobile device, chip card, Secure Element in a mobile device) or virtual/data (device digital certificate, electronic payment credentials provisioned to a customer device, device/application Token etc.).
Ensuring that physical possession-based authentication elements can only be controlled by the PSU will typically leverage (a) A secure customer registration process, (b) A secure distribution process that leverages previously-registered/verified contact details, (c) A separate “activation” process and (d) Guidance provided to PSUs on the need to keep such elements under their control at all times and report lost/stolen/compromised physical elements or mobile devices.
Limiting access to virtual possession-based authentication elements to the legitimate PSU usually leverages secure distribution/provisioning processes to previously-registered target customer devices. Using these processes, the virtual authentication element is typically cryptographically bound to some unique/persistent characteristic of the target device that is difficult to alter or manipulate. A separate “activation” step may follow that involves extended PSU authentication; typically, this leverages existing customer account information. The process of limiting the use of data-based authentication elements to a specific physical device (or a set of devices) limits the risk of exposure/re-use of these elements by an unauthorised party and supports a PSP’s efforts to build up a Customer Profile.
Additional authentication element access controls may be incorporated:
➢ In the design of a user interface/application client that needs to be used to access data-based possession authentication elements,
➢ Through the use of the target device’s customer access interface if this interface is open for use by 3rd party application developers; this may leverage independent inherence or knowledge-based authentication elements.
It is worth noting that possession-based authentication elements are mostly used alongside other independent authentication elements (e.g. knowledge-based) to provide increased confidence that a payment interaction is initiated by a legitimate PSU.
Inherence authentication elements should be uniquely associated with a payment service user. Typically, biometrics (fingerprint, iris scan, facial scan, voiceprint etc.) are used to complete user authentication using inherence-based authentication elements.
Since behaviour-based transaction characteristics cannot be uniquely attributed to a payment service user, they are not appropriate to use to complete SCA.
Instead, such characteristics are typically used – as part of a transaction risk assessment process – to identify low risk transactions that are exempted from the need to complete SCA. The use of behaviour-based characteristics, as part of a transaction risk analysis process, is dependent on the existence of an established Customer Profile, for the PSU attempting to initiate a payment account interaction.
While drafting the RTS, we feel it is also important for the EBA to evaluate the impact of existing data protection requirements on processes that can facilitate the sharing of customer behaviour-based characteristics. PSPs may find it difficult to demonstrate to external parties that they have complied with SCA requirements by using certain inherence elements, if they are prevented from sharing such elements with external parties due to applicable data protection regulations.
The growing use of mobile devices to initiate remote payment transactions limits the independence/“separation” of authentication elements used in multi-factor user authentication processes. The compromise of a customer’s mobile device may allow an attacker to gain access to multiple authentication elements (inherence or possession-based) stored in/delivered to or accessed through that device. The use of Trusted Execution Modules/Secure elements to store authentication elements in an increasing number of mobile devices can minimise the risk of such elements being compromised if the device falls outside the control of the legitimate user.
Increasingly, PSPs are required to design customer registration processes that leverage multiple communication channels (fixed line, mobile, wireless, VoIP, e-mail) and secure communication protocols (using end-to-end encryption) or 3rd party communication platforms (use of social media accounts etc.) to deliver independent authentication elements to the legitimate PSU. A number of additional risk-based factors (behavioural, device-based etc.) are used to flag mobile payment interactions where additional customer authentication should take place.
When drafting the RTS, we would encourage the EBA to:
➢ Acknowledge the operational difficulties that the growing use of the mobile channel introduces in this respect and,
➢ Ensure that a risk-based, flexible approach is applied to the requirement to ensure authentication element “independence”.
The lack of a definition for “dynamic linking” in PSD2 makes it difficult to fully assess the challenges involved in completing SCA that comprises elements “dynamically” linked to particular amount/payee transaction information. The RTS that are drafted by the EBA should seek to provide additional clarity on this point by providing examples ( not an exhaustive list!) of mechanisms that can be used to deliver such linking in the context of a customer authentication.
In any case, a significant challenge to the proposed linking of SCA with “dynamic” transaction information is that it will add very significant friction to existing customer online payment interaction flows for certain types of PSPs (e.g. wallet providers, merchant payment processors for merchants that use direct-debit/standing order/recurring transaction payment arrangements). These typically comprise an initial customer authentication session followed by a series of payment transactions that may be authorised individually without the need for separate customer authentication until risk/account usage thresholds are reached.
A number of mechanisms (timestamps, unique transaction identifiers) can be used to ensure the uniqueness of each transaction; user interface/application design controls can be used to request that an authenticated PSU explicitly authorises every transaction before an attempted transaction can be completed. However, such controls can be compromised by device/OS malware or poor application access controls. This may result in the EBA having to specify User Interface/Application Design criteria that would be needed to facilitate the development of secure User Interfaces. This would not be a desirable approach.
We suggest that a flexible approach to the concept of dynamic linking should be taken by the EBA and EU regulators: whilst every transaction should be authorised separately, users could be periodically prompted to re-authenticate themselves on a risk-based basis rather than for each transaction. This approach would strike a pragmatic balance between PSU authentication, transaction authorisation and a low-friction user experience.
A number of mobile payment solutions are available in the market that employ SCA and a payment application user interface design that requires the user to authorise every attempted payment transaction. These comprise:
➢ Mobile SMS Tokens that includes transaction information (if the payment interaction is initiated via PC/tablet/mobile browser and the transaction validation/authorisation is provided through a standalone mobile payment application or an e-mail),
➢ A dedicated mobile customer authentication application that can receive secure transaction information (from a PSP) and interact with the PSU to obtain authorisation,
➢ A mobile payment application if it is logically separated from the shopping/order channel (e.g. access to PSCs is only managed by the payment application) and individual transaction data are used to compile payment notification/authorisation messages,
➢ Physical hardware tokens (standalone or securely connected to a customer device) that can be used to generate cryptographic signatures that include individual transaction data or display payment transaction notification messages with individual approval codes forwarded by the PSP that manages the payment account.
The clarifications on the potential exemptions to SCA listed in paragraph 42 are useful.
Additional EBA guidance on types of “low-risk” transactions would be welcome; as stated earlier, our Members are looking for examples rather than a definitive list of such transactions!
The definition of whitelists in paragraph 42 (Bullet Point B) appears overtly restrictive; the PSP should also be allowed to build up a list of trusted payees that benefit from an exemption to the need to complete SCA (e.g. based on merchant type, a previously-received authorisation as part of a series of recurring transaction/standing order etc).
EMA Members that offer Account Information services would also welcome some additional clarity on the scope of the wording in paragraph 42 (Bullet Point E); our assumption is that account balance/status data does not constitute “sensitive payment data” and services that only display these can benefit from this exemption.
When drafting the RTS, we would encourage the adoption of a risk-based approach to identifying SCA exemptions. Such an approach acknowledges wider factors associated with an attempted transaction (e.g. payment channel used, amount, payee, transaction type, recurrence, device profile information, alignment with existing customer profile) to allow PSPs to meet PSD2 security requirements without severely impacting customer experience.
Contextual information about an attempted transaction and customer device status/location information can be combined with customer profile information to identify “low-risk” transactions. Payee information may not always be available to use/accurate enough to support an effective transaction risk analysis.
Payment channel criteria may also be leveraged in a transaction risk analysis process. Finally, the overall assessment of the payment threat environment (leveraging security intelligence, data analytics or even law enforcement updates) can be used to support a transaction risk analysis process.
Any minimum transaction risk analysis capabilities (and transaction information) the EBA proposes to define in a future RTS should allow the use of alternative risk information to carry out such analysis. This would reflect differences in the availability of such information across different parts of the payment industry.
The clarifications that the EBA proposes to provide in future RTS (on the security afforded to user PSC) as listed in Article 52 are useful.
We believe that the clarification provided in the RTS should also address the security principles that apply to the subsequent safe use of delivered PSCs to initiate payment transactions in a range of environments especially when multiple PSPs (AI-PSPs/PI-PSPs and an AS-PSP) are involved.
Additional payment fraud risks related to the use of PSCs that future EBA RTS should address comprise:
➢ The unintended/unauthorised use of legitimate PSCs (through PSP/payee/transaction spoofing, man-in-the-middle or replay attacks),
➢ Compromise of PSCs shared with rogue 3rd party PSPs/TPPs,
➢ Denial of access/service/availability attacks that impact a PSU’s ability to access their online payment account,
➢ PSC lifecycle risks (related to the replacement/withdrawal/suspension of credentials) that may give rise to repudiation of legitimate transactions.
In this context, we feel that the issue of secure identification/registration of PSPs in a manner that allows them to be verified by other PSPs should be addressed by the RTS.
PSC issuers use a range of solutions to securely enrol PSUs before delivering payment credentials to the legitimate users. Some of the more innovative solutions comprise:
➢ Leveraging national/industry-wide ID schemes that are widely used in some EEA territories (e.g. Germany, Scandinavia, Baltics etc),
➢ On-device generation of temporary credentials (to bootstrap the enrolment process) using client devices that have a segregated Trusted OS-controlled Zone or a hardware security module (Secure element),
➢ Leveraging a previously-registered customer device (to push a mobile customer registration/authentication application that is bound to that device); the biometric authentication interface of the device may be leveraged to support this process if is available for use to 3rd parties.
➢ Leveraging a physical payment instrument (e.g. a payment card previously issued to the target PSU) used in a secure interface (e.g. ATM) to kick off the customer enrolment process.
➢ Application Tokens (that are time-limited and device/channel-specific) distributed over secure communication channels to a registered customer device; these often leverage device manufacturer or MNO device management infrastructure.
Self-certification (against a defined requirements’ evaluation framework) can be an alternative to independent/3rd party security evaluations. Such an approach can be supplemented by periodic 3rd party evaluation assessments depending on a PSP’s risk profile. An RTS Governance Body would use parameters such as transaction volumes, levels of fraud, scope of services to build up a PSP risk profile. This hybrid approach is already used successfully by a range of payment industry security standards (e.g. PCI-DSS, PA-DSS).
We would also suggest that an EBA proposal - to recommend 3rd party evaluation/certification of PSP systems/technical components- considers the logistics of establishing a transparent evaluation framework that applies to different types of PSPs. The scope of systems that will need to be certified is extremely wide and not all solutions will be suitable for all types of PSPs.
Finally, we hope that the EBA RTS will take into account existing market dynamics; historically, the appetite of global customer device/OS manufacturers/MNOs to submit their devices for payment industry-driven standard certification has been limited. Where such certification has happened, it has led to limited device options or higher device costs that have inhibited customer take up or disrupted widespread service deployments.
The risks to PSCs differ in different segments of the payment chain. The devices used by PSUs to access PSP services are a frequent target of attack since individual users often do not deploy/update security software on these devices; this makes them susceptible to virus/malware that seeks to compromise payment credentials.
Large databases (of AS-PSPs or cloud IT service providers) holding large numbers of PSCs are usually protected by multiple security controls; however, they are targeted by more sophisticated attackers that wish to gain access to multiple credentials that allow them to harvest large numbers of credentials and use them to execute quickly-scalable fraud.
PSD2 introduces new types of communication between PSPs that often have no previous commercial relationship; this communication will also likely be targeted by attackers wishing to access PSCs that may be communicated between PSPs.
The EBA RTS should provide guidance on how to preserve the confidentiality & integrity of PSCs; such guidance should be applicable to multiple payment industry segments.
The clarifications provided in paragraph 63 are suitable; they should be expanded to cover:
➢ The identification/authentication of PSPs by PSUs; this may pose a particular challenge for TPPs when there is no prior relationship between the PSU and the TPP that is offering a specific payment service to the user,
➢ The registration/verification of PSPs (as part of an RTS Governance framework),
➢ The process a PSP can use to confirm that a communication API complies with PSD2 requirements and the EBA RTS.
We believe that, as a minimum, the clarifications provided in the RTS should:
➢ Detail the security requirements applicable to the different types of intra-PSP communication,
➢ Specify a compliance assessment/evaluation framework that can be used to assess whether an API developed by a 3rd party complies with the RTS; this may be provided in the context of the definition of a wider RTS Governance Framework
➢ Describe a process for verifying/registering PSPs that wish to communicate in compliance with the RTS; the process should allow PSPs that have no previous relationship to verify the authenticity of each other as well as the scope of payment services they have been authorised to offer.
API standardisation efforts that are well placed to deliver secure, open intra-PSP communications comprise:
➢ The ongoing work that the Open Banking Working Group (OBWG) is carrying out in the UK on behalf of HM Treasury,
➢ The SEPAmail secure messaging service and the Instant SEPA Transfer initiative run by EPRB,
➢ The FinTS and ZOB open banking data exchange standards in Germany.
The work of the cross-industry FIDO Alliance < https://fidoalliance.org/> to produce open standards that facilitate secure, interoperable strong user authentication is also worth tracking; a number of global customer device manufacturers have already deployed devices that are compliant with the FIDO specifications.
The EMA believes that, where possible, the RTS should facilitate the reuse of existing frameworks (data/metadata reference models, data dictionaries, ISO currency codes etc.) that are already used by the payment services industry to identify and share payment account data.
Our concern is that many bank-focused interfaces/standards do not lend themselves well to communication with other PSPs over open TCP/IP networks.
As new payment service business/delivery models continue to be deployed, we feel that EBA can ensure that the RTS remain relevant and compatible with future innovations by:
➢ Focusing on defining security requirements that deliver the required security properties (e.g. confidentiality, integrity, authenticity) for data exchanged in the course of intra-PSP communication rather than attempting to define specific security controls/mechanisms to use,
➢ Defining a flexible RTS Compliance Assessment Framework,
➢ Designing a Governance Framework that affords PSPs and technology vendors an ability to participate in the maintenance/evolution of the RTS.
We believe that the potential of the e-IDAS regulation to support SCA, protect PSC and support secure intra-PSP communication should be assessed further.
The e-IDAS regulation was produced to address the needs of a different user community (public agencies and individual citizens) and support a specific function (secure and interoperable entity identification & authentication). As far, as we know the payment industry has not been involved in the development/assessment of this regulation, so far.
The e-IDAS regulation introduces useful concepts including assigning levels of assurance to access controls that limit the use e-IDAS credentials to the legitimate user. Such a concept may also be applied to PSCs.
On the other hand, it is not immediately clear how the e-IDAS regulation can support the PSD2 requirement for dynamic linking of individual transaction data within the customer authentication process.
The scope and the timeline of adoption of e-IDAS by the private sector (and even by government entities in different EEA countries) are unclear to us. Additionally, no country outside the EEA has indicated they will be adopting e-IDAS identification services; this limits the appeal of this framework for PSPs with a global presence.
We believe that the use of qualified trust services, as defined in the e-IDAS regulation, can support the secure identification & registration of PSPs potentially acting as PSP Certification Authorities (CAs) that distribute digital certificates to verified PSPs. Such activities will likely form part of an overall RTS Governance Framework (as per our response to Question 18, above).
In turn, this step can be used to bootstrap the secure intra-PSP and PSU-to-PSP communication including the secure exchange of PSPs between the PSU and the PSC Issuer in service delivery scenarios involving TPPs.
If used in a PSP CA capacity in the RTS, the commercial liability status of e-IDAS qualified trust services should be clarified in the Standard.
Electronic Money Association
Trade Association representing alternative PSPs, including EMIs, PIs, and some CIs
Representing the interests of payment instrument issuers, acquirers, and payment initiation services