By now, you’re more familiar with GDPR than you ever wanted to be – whether it’s because of the countless emails about updated privacy policies that are still sitting in your inbox, or because your business had to do some updating and emailing too. GDPR is the European Union’s General Data Protection Regulation, which started on May 25th of this year. And it’s not just Europe-based companies that have been impacted. Every company that processes EU citizens’ data must comply with GDPR.
But GDPR was only the beginning. Governments worldwide are grappling with privacy regulation, struggling to understand what businesses can (and should) do with consumer data. And businesses are struggling too: trying secure customers’ trust by laying the groundwork for compliance, but not burdening users with opt-ins, notifications, restrictions, and other hassles.
It’s not all doom and gloom, though. Jeff Sakasegawa, a trust & safety architect at Sift Science who used to handle compliance at Square, says that these regulations can be unexpectedly great for your business. If you play your cards right, compliance initiatives like GDPR give you a great opportunity to prepare your business for a world in which data is currency, and data protection makes or breaks consumer trust. If you don’t, you’ll fall behind. Regardless, though, one thing is clear: GDPR wasn’t the end of the story.
It’s Not Just GDPR
If you thought you were done with compliance on May 26th, think again. Trust is playing an increasingly central role in the way we operate online, and compliance gets second billing. For a glimpse of the future, we need look no further than PSD2, the EU’s directive on payment services. Designed to incentivize fraud prevention and disrupt trends in online banking, the Revised Payment Service Directive (PSD2) could prove to be a game-changer.
To comply with PSD2, banks must release their data in a secure, standardized form that allows it to be shared between authorized online organizations. The implications are clear: any entity that takes possession of that data – from Google to Facebook to smaller fintech companies – can now compete with a bank. If that sounds unsafe, don’t panic. The second part of PSD2 is that banks can’t share that information without explicit approval from the account holder. So, anytime an account holder accesses their account online, engages in a transaction, or performs an action that produces data which could be shared with a third party – anytime a user does anything at all, they must use Strong Customer Authentication (SCA): a method for multi-factor authentication. This requires the user to validate their identity by providing knowledge that only they would know, like which middle school they attended, or their mother’s maiden name. Yes, that’s right: to comply with PSD2, fraud prevention is no longer optional.
Businesses must invest in fraud prevention solutions that are robust, effective, and transparent. Companies that failed to do so prior to GDPR and PSD2 found themselves scrambling and vulnerable when the regulatory hammer came down on their heads. Now more than ever, it’s vital to invest in a robust fraud solution and ensure your privacy policies are up to date. Establish procedures for keeping your customers informed so that they’re always aware of the data you’re collecting and what you plan to do with it. Audit the data you’re collecting to make sure you are only collecting data in pursuit of the application you’ve told your customers about. Your customers will thank you.
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