BRUSSELS Nov 22 The European Union's planned
rules to reduce fraud by forcing the use of passwords or codes
to authenticate electronic payments above 10 euros ($10.60) risk
disrupting online shopping and may not increase security, Visa
said on Tuesday.
As cybercrime and online fraud are on the rise, the European
Banking Authority, the EU's banking regulator, proposed in
August draft technical standards to prevent illegal activities,
including the passwords.
"These new proposals threaten to seriously disrupt the way
we all shop online," Visa's chief risk officer for Europe, Peter
Bayley, said in a statement. "All of this inconvenience comes
with no evidence that it will actually reduce fraud."
The world's largest payments network operator said
e-commerce may fall in Europe if the proposed rules where
adopted, as consumers will be discouraged by the new technical
hurdles while purchases outside the EU may be blocked.
It said payments to vendors outside the EU amounting to more
than 6 billion euros are at risk of being declined by network
operators because foreign websites, based in the United States
or Japan, may not apply the EU's new security standards.
A survey conducted by Visa said that 51 percent of European
consumers shop online from retailers outside the EU.
Payments of more 10 euros with apps such as ride-hailing
service Uber or on websites where consumers have registered
their payment cards would also no longer be automatic, but will
require verification codes.
Currently, payment services require authentication only when
a shopper buys from vendors or from locations that are seen as
suspicious because different from previous shopping patterns.
"The EBA had to make difficult trade-offs between various
competing demands," a spokeswoman for the regulator said. "These
include the opposing objectives of achieving a high degree of
security in retail payments against customer convenience."
The banking authority will adopt a final proposal at the
beginning of next year and is considering whether to introduce
changes to its draft text, the spokeswoman told Reuters.
The European Commission, the EU's executive arm, will have
to confirm the proposed technical standards. EU states and
European lawmakers will then have the last say, but only rarely
they have blocked decisions on standards which apply previously
($1 = 0.9437 euros)
(Reporting by Francesco Guarascio)