European Payment Institutions Federation (EPIF)

Additional examples

• Refunds based on stored payment instruments
• Refunds directed to another payment instrument
• Chargebacks
• Cancellation of cards and other deliberate ‘denial of service’ such as closure of accounts, removal of continuous authority mandates, etc.
• Merchants where the payment flow is a reversal/refund or other rebate

Risks from remote channels

97(1)(c) - “carries out any action, through a remote channel, which may imply a risk of payment fraud or other abuses.”

Some situations that may introduce risk and/or fraud outside the PSP’s coverage:

a. If the user must pass through a proxy (office location, hotel, ISP), it can be set to break the encrypted connection and inspect the information, thereby allowing for the authentication information to be captured.
b. Users may be tricked into using an attacker’s wireless network that can be setup with a proxy, which breaks the encrypted connection and allows the authentication information to be captured.
c. Malware on the Users device, which is outside the control on the payment system may capture the authentication elements.
d. Bad user actions – The user does not lock or require any authentication to use their device; The user leaves information in old emails and SMS messages that provide details into what is needed; The user does not maintain physical control of the device.
e. Attackers can setup fake sites to look like the real site; Put the real site in a frame on their site to gain credibility; Have the person click something on the attacker’s site that they think is just redirecting them to the real site.
a. These setups can allow for something to be done behind the scenes to capture authentication information.
f. DNS can be attacked to redirect users to fake sites that they believe it real and the attacker connects all their communications to the real site, but capture authentication information.

Direct Debits

It is not clear whether the strong authentication requirements of 91 (1) (b) apply to Direct Debits as these are actually “initiated” by the payee or by the payee’s PSP.
Principles for possession

• Data needs to be volatile to be considered physical possession elements, for example:

o A private key secure in a tamper responsive hardware device could be considered as data as possession element, for example a Secure Element as defined in Global Platform on a plastic card, a SIM or an embedded secure element as used in ApplePay.
o A dynamic value that changes on a token (like an RSA token or a dynamic CVV payment card) the value of the dynamic element can be considered proof of possession.
o A dynamic value that changes using secure software on a phone (or other device?) can be considered possession, for example google authenticator, Symantec VIP
o A secure software solution that confirms its status and the status of the device to the ‘server’ in real time as it is used.
o On a typical payment card the printed CVV2 on the cardholder signature strip is considered appropriate evidence of card possession. Note it is not stored by the merchants, ISPSP or any other actor in the payment chain.

• An EMV chip transaction with generated dynamic cryptogram sent along with the payment data is proof of possession of the card. This could be read by contact interface, the contactless interface, or from an embedded EMV card in a phone (e.g. ApplePay).

• The Magnetic Stripe data read from a card is to be considered possession of the payment card - although weaker than EMV.

• An embossed card number on a card where this number is ONLY printed on the front (not used for EMV, Contactless or Magnetic Stripe) is considered as proof of possession of the card.

• An IMEI from a phone is hard to clone and should be considered as possession of a SIM Card, where this can also store payment credentials

Examples of Possession Elements

Possession elements considered appropriate to be used in the context of strong customer authentication:
i. Simple OTP via SMS / Email
1. If delivered to a separate device than being used to access the website. (i.e. website via PC, SMS via phone)
ii. TOTP
1. If shared secret is stored securely - properly encrypted.
2. Shared secret changed at some interval
3. Ideally delivered to a separate device than being used to access the website.
iii. Hardware device plugged into phone to generate OTP
1. Ideally used on a separate device than being used to access the website.
iv. Hard Token separate from any user device.
v. Software based - soft token on the device
1. If used on a separate device than being used to access the website. (i.e. website via PC, soft token app on the phone)
vi. Client certificate on the device tied to the User
1. This would be used in conjunction to strengthen other possession elements, but cannot stand as the possession element on its own.

Control over passion elements

Possession elements can only be controlled by the PSU -
i. If the user is accessing the site using the same device that will get the secondary value, it prevents an attacker from remotely gaining access to an account on a website, but does not prevent access if the physical device is compromised or stolen. This can include bad user actions, such as not locking devices and requiring a password to access the device.
ii. Solutions such as a hard token separate from any device used to access the website provide the best attempt to ensure the PSU is accessing the site, but also does not provide the ease of use customer experience and depending on the risks may have a cost that is too much.
iii. In the end, to accommodate the user requirement, where access is all via a mobile device and is quick and easy, a compromise of risk and risk acceptance must be determined.

Indicators of strength

The table below gives some examples of possession elements and an indication of their strengths though this will vary with, and depend on the business model in which they are applied.

Credential Factor Comment Strength (note (1) weak credentials can provide strong authentication when used as part of multifactor or multi credential authentication (2) the strength depends on, and varies with, the business model in which the credential is operating)
CVV (CV2) Possession Because PCI restrictions forbid storage of the CVV, the knowledge of this is considered possession of the card. However is should be considered weaker than other possession types due to ease of ‘skimming’ Weak
PAN Possession PAN and CVV might be also consider as Knowledge Factors as user don’t have to physically possess card when initiating transaction. (e.g virtual cards) Weak
EMV PIN Knowledge Medium
Online PIN/Password (3DSecure) Knowledge Medium
EMV Chip Possession Strong
Address (AVS) Knowledge Whilst AVS is usually consider knowledge, when used in conjunction with shipping of good/services to that address, it is considerably stronger and might be considered a possession factor Weak (Strong if used in conjunction with shipping and receipt check)
Fingerprint Inherence Strong
Cryptogram Possession Whilst Cryptogram is data it is derived from the possession of a token. Even if this is not stored in a hardware solution it could be considered possession if the software solutions are considered sufficiently tamperproof Strong
IMEI Possession Whilst cloning of IMEI is possible, it typically involved access to the device to insert a hardware shim. Therefore is should be considered a strong possession. Strong
Vein Print Inherence Strong
Iris Scan Inherence Strong
Magnetic Stripe Possession Weak due to cloning possibility Weak
Transaction Patterns Inherence Medium/Strong
Typing Cadence, Writing Gait Inherence Strong
Voice Print Inherence Strong
Time Limited SMS code Possession Strong
Device fingerprint Possession Technical implementation based on the identifiers provided by software elements can be cloned. Technical solutions based on the fingerprint generated by the electronic circuit can be considered Strong. Refer to “PUF technology” (Physical Unclonable Functions) for further detail. Medium to Strong
User behaviour Inherence The collection of data inherent to how a given user makes use of his computer (including, browser cookies, browser identification, add-ons or plugins installed, etc) make possible to characterize the user. Medium to Strong
Yes, we strongly believe that transactional patterns of behaviour is strong customer authentication. For example historical behaviour of a payment instrument or consumer behaviour can indicate strongly that the payment instrument is in the hands of the consumer. This can be considered a factor for authentication but behaviour based elements provide some support to aid in creating strong customer authentication, though not provide strong value on its own. Behaviour based characteristics should not be a requirement at this time, but should be permitted. If reliable solutions are developed and proven, then requirements can be added.

We would add that voice authentication is also a behavioural based characteristic and can be considered strong

The conditions include:

• Enrolment considerations would also need to be taken into account

• Inherence needs to have a target false positive vs false negative rate to be considered usable in the real world.
• Strong Customer Authentication (SCA) based on behaviour-based characteristics should be compatible with the provision of payment initiation services.

Inherence elements such as fingerprints and others can have a certain unreliability associated with them. As well as the fact that if the information is compromised, it cannot be changed.
• Enrolment, when the mobile phone has to be in possession of the user must be extremely strong during provisioning of the Personal Security Credentials (PSC) (see further views in question 6).

• The historical commercial failure of provisioning PSC into secure elements on phones and sim cards will be a challenge to implementation.

• Chain of custody of the device, to ensure that the device is in the hands of the consumer. Controlling the device and the software on the device makes it less challenging to provide strong customer authentication. This can be addressed by controlling the software, as extensive real time checks can be performed on the device and the application. This includes the full range of expected security checks – jailbreak / rooting, malware, location, user behaviour, application check-summing (confirms the application has not been tampered with), device ID information etc.

• Accessibility - the authentication elements have to be usable to the broader population e.g. users without access to a smartphone; network dependency on IP connectivity; reliance on a single device that, if lost, contains all the information to commit fraud; ability to use the strong authentication on a device at the same time as shopping on the device etc.

• Mobile as a single device holding multiple factors can be compromised more easily than multiple devices e.g. If the handset is lost or stolen and the code unlocked, the fraudster has access to my SMS, email, banking, ApplePay, provision Biometric, password reset to iCloud. This inherently makes multiple factors vulnerable.

• Smart phones have taken over and will continue to grow. Users want everything to be available or accessible by their smart phone.

• Users are not worried about security, in general. Users are more focused on ease of use, speed, etc. and will implement any shortcut that requires them to do less. (i.e. allow browsers / apps to cache login information) Implementing great security controls can lead to perceived poor user experiences. Implementing authentication mechanisms outside the mobile device is becoming more difficult and expensive and less accepted by the user community. (Depending on the solution, target audience and size of audience) This may drive poor user behaviours that undermine the security features.

• The security features must be compatible with inexpensive mobile devices or risk pricing out lower social economic groups from the internet which often provides cheaper cost options.

• The security features must be accessible while using the mobile device on the site where the purchase/transfer is hosted

• The security features must be manageable by those with even moderate disabilities e.g. failing eye sight; arthritis etc.
• EMV contact or contactless does not support today a signed data element which identifies the Payee (the merchant). The same applies to other current solutions for consumer to business. So the time to upgrade EMV is typically 10+ years - as all cards and terminals have to replace or upgraded. Currently the data signed from the terminal is typically a random number and the amount.

• We would like to understand business need for this with legacy global networks, as the payee is effectively protected in the payment network, and provided to the ASPSP through the payment network. The ASPSP typically provides Payee information during or after the transaction (e.g. card notification via SMS or ApplePay notifications).

• Allowance also needs to be made for the fact that systems do not run on-line 100% of the time and an ability to replay transactions is a required e.g. to reverse a systems error.

• We do not think it is practical for consumer payments at retailers, but may be for direct credit transfers.

• Example problematic scenarios for dynamic linking:

1. Restaurant bill with variable tip
2. Settlement where foreign exchange changes the representation (change of currency) or changes the value (due to swings in rate)
3. Damage deposits (e.g. Hotel)

• Technology independence. It cannot be that we need a payment card (with an additional signing device) or analogue virtual to achieve a transaction based on a Bank Account.

More generally, the interpretation of dynamic linking needs to be clearer. The interpretation is that dynamic linking is the nonrepudiation related to the payment being made by the PSU in that they authorized the action and the integrity of that action has been maintained. If the interpretation is correct, this would be two separate items.

• First the PSU identity must be validated by the authentication mechanisms used.
• Second, once in the application, the identity has been established and the actions taken by the user must be properly logged to ensure that nonrepudiation can be performed to ensure the payment details were entered/directed by the user and any changes made along the way were performed by authorized personnel, as well as, what the changes were.

Another interpretation is that a payment would be made on behalf of a PSU using their authentication credentials? Is the dynamic code for example, an SMS alert stating a payment has been authorized in the amount of $xx to <person>, so the PSU can stop it if not authorized by them?

Overall, we were unclear on the intent of what is being covered with the dynamic linking and dynamic code.
• ApplePay comes close - however all authentication factors are on a single device, and the PAN is re-used (non dynamic), the EMV technology does not dynamically link the transaction to the payee (see point in Q5).

• CAP tokens (as using for banking in the UK for example) are another example – however, this technology is being withdrawn due to a very poor customer experience which the EBA proposals are in danger of replicating. Solutions like these can be in software in a banking app (e.g. Barclays) which is a slightly better experience, but not a panacea. We recommend that the EBA look at the UK experience of introducing CAP tokens and the difficulties of adoption due to very poor customer experience.

• Any solution adopted need to be compatible with the provision of payment initiation services so as to avoid that ASPSPs effectively use the authentication solution as means to hinder PISPs to provide their services. As an example, the authentication cannot be fixed to a certain IP number. For instance, aggregators/payment facilitators are an important part of the PSP market and they need to be able to present the credentials on behalf of the PSU
The concept of trusted payees can be applied in the context of cards, for example behaviour can infer lower risk and reduced authentication for a specific transaction at a specific retailer.

Consider mobile, where there are 1000s of data points available to identify the device, its behaviour, its sensors etc. Similar technology exists and is in use for a PC browser. One challenge for this approach is who has the interaction with the device / browser? If this is, for example, the merchant who just sends the payment information the processor cannot collect the data to do the analysis.
• Any exemptions should be symmetrically and consistently applied to all payment methods in order to secure a level playing field.

• Chains of trust should be considered, where the payee has authenticated the payer the liability should be on the payee. This will allow the “account on file models” to continue.

• See above on our points on the exclusion of telephone orders.

• Re. paragraph 43. We suggest that the channel used is mandated to be flagged to everyone in the ecosystem. This provides more information to enable risk based decisions about the transaction. This should be flagged at the earliest point in the transaction chain.
• Re. paragraph 45. This needs to apply to payer as well as payee

• See Q8 response
Yes: PSPs in the chain need to be able to identify payment users (payee and payer) to allow management of the risks in the payment chain (e.g. fraud and money laundering). This is key to enabling risk based authentication and exceptions to this.


a. The PSP can attempt to securely provide the PSU with credentials, but the PSU has to be responsible to protect the information given to them, their email, their device, etc.
b. The PSP must properly protect the authentication information stored in databases, etc. under their control.
See Q10 response. The more anonymous the payment credential, the harder the management of risk.


a. The PSU is the greatest risk as it relates to their personalized security credentials. As stated, loss of device, phishing, scamming, social engineering, fraudulent sites, device hacking, etc. There are so many ways that from a user perspective the security credentials can be affected.
b. On the PSP side, proper encryption at rest, encryption in transit, proper application controls, logging, proper call centre procedures, etc. need to be in place to ensure the security credentials are not exposed or account access provided to the wrong user.
End2End encryption (when done well)

Novel techniques for the identification of the cardholder using point or sale and ATM technology.

• Delegated authenticated to a trusted third party

• FIDO (Fast Identity Online) allows for a standard way of authenticating on a device.

• SCAI - stacked countersignatures attributes implementation

• Quantum information processing (an emerging field) can protect data in communications, if you observe it, the information disappears by magic. See Quantum Base, and papers by Prof Robert Stevenson (Lancaster University)

However, the above do not deal with enrolment which remains the critical challenge in any credential system
Implement requirements in line with other frameworks to allow for the leverage of compliance with those to aid in the verification of the controls such as PCI-DSS, Cybersecurity framework, ISO framework.
The largest issue is the user and the users’ device. Users generally do not worry about security, but more about ease of use and speed. This leads to unlocked devices that contain applications with open access to all their information (email, bank sites, etc), unpatched devices, phishing or social engineering, malware, pop ups on certificate errors dismissed. The Payment Service User is also the biggest risk to confidentiality.

If the EBA RTS introduces a complex process for PSU and a poor PSU experience there is a real danger that this will increase the risk of leaking security credentials as PSU seek to circumvent the strong authentication processes.
a. Yes - use the Open Bank Working Group (OBWG) reference and W3C definitions
b. Yes - note it is not clear how the role of merchant payment processors works with this model, for example the PIS actually connects indirectly to the ASPSP via an acquirer, which does not fit into this model. Please clarify the role of merchant payment processors (aka acquirers).
c. Yes - use common web standards at the PSU end. But for the PIS, AIS and the ASPSP this would need to be a new standard based on ISO20022
d. Yes -
e. Yes -
f. Yes -
In our opinion, RTS should set up the general framework within which ASPSPs, PISPs and AISPs operating on national or cross border level collectively will be able to develop open, technically neutral and interoperable standards. RTS regulations shall acknowledge that any PSP operating within the specific standard developed in line with RTS should be considered as compliant with PSD2. Implementation of standards should be possible with local conditions.
Again, we suggest making use of the OBWG.

The RTSs shouldn’t preclude appropriate infrastructures: Although infrastructures should not be mandated by the RTSs, neither should they be precluded. Especially since the need for insurance would seem a potential major obstacle for new entrant PISs. If a scheme were introduced that reduced risk, analogous to card schemes / ATMs, then the need for insurance could be severely reduced or even eliminated. It would seem appropriate that any such infrastructures should be prepared to self-regulate against appropriate entry and rule setting criteria as in the PFMIs.

Relatedly, the need for insurance would seem a potential major obstacle for new entrant TPPs. If a scheme were introduced that reduced risk, analogous to card schemes / ATMs, then the need for insurance could be radically reduced or even eliminated.

There are serious practical concerns making all TPPs have to obtain insurance to cover the risk for ASPSPs and their customers in the event of TPP liability beyond TPP capacity to pay.

 Insurance is likely to be difficult to obtain: Insurance was suggested as a solution for client cash segregation. But in practice, this has not proved the case. As an entirely new market insurers will find it hard to understand. Especially for new innovative business models.
 Even if it could be obtained it would likely be costly: any insurance that is mandated by regulation tends to be very expensive unless steps are taken to encourage a competitive market.
 Insurance is unlikely to be sufficient to cover the risk: Even if insurance is possible to obtain, there is still scepticism if it will work in practice in the event of TPP default. The TPP will have negotiated it, probably in its home jurisdiction, with greater concern to reduce cost than to cover all risks. Claiming by multiple ASPSPs and customers from multiple jurisdictions will be a complex process.
 Therefore, making insurance a pre-condition for TPP authorisation risks severely impeding new market entrants and so limiting innovation and competition in TPP access services.

It is suggested therefore that solutions are considered which could radically reduce or even eliminate the risk. For example, payment card schemes and ATM settlement schemes, are able to deal with similar risks using rules and processes without the regulator-imposed need for insurance. Although setting up new schemes is not easy and membership rights have to be agreed, if schemes or central services were introduced which similarly reduced the risks of TPP default, this should logically lead to reduction or elimination of the insurance obligation. It would encourage the development of such services if there were some acknowledgement of this possibility in the RTSs. Risk reduction could be achieved by adopting processes such as processes to facilitate the reimbursement of losses created by TPPs, e.g. with specific message types, agree error categories, agreed admin charges etc.
Again, we suggest making use of the OBWG.


In terms of a potential new PIS business model, in which the PISP would issue its own credentials, and then be able to initiate credit transfers from payments accounts serviced by the ASPSP, there are several factors to consider. Firstly, as not every payment would be subject to the ASPSP’s own authentication, a risk for unauthorised payments would emerge. Secondly, the ASPSP and PISP could have a different risk assessment of any given payment. Thirdly, it is unclear how the set-up would technically work. As such, this business model would likely require the development of a new “scheme”.

A number of “use cases” should be evaluated to determine how to properly structure the framework to create common and open standards.


In our view, the credentials used to initiate the credit transfers should always be those issued by the ASPSP to the account holder, even if they are being presented by a third-party. We cannot see how anything else would work in practice. EBA may accept this, however, the last section of Q18 could imply that EBA may have something else in mind? Q 18: How would these requirement for common and open standards need to be designed and maintained to ensure that these are able to securely integrate other innovative business models than the one explicitly mentioned under article 66 and 67 (e.g. issuing of own credentials by the AIS/PIS)?" (emphasis added)"
Most likely not - the regulations cover known limited set of entities with a set solution, whereas this standard is looking to cover unlimited solutions with unlimited customers. It would depend on how the e-IDAS regulation applies to payment products: at present, given the lack of harmonization in this area – e-ID might lead to market segmentation rather than pan-European authentication solutions. In fact, we would recommend the any customer authentication solution based on e-ID should be an option rather than a binding requirement for payment providers Nonetheless, we agree this should be looked at but in conjunction with W3C web authentication, Biometrics institute, Verifiable Claims, FIDO, OAUth2.0, SAML, OpenID Connect, GSMA mobile identify, 3DS 2.0, 3DS 1, EMVCo chip based authentication, CAP banking.
Although Islands or Tribes of trust would benefit the payment ecosystem and accelerate the implementation of Strong Authentication, services requiring this for payments are authentication of PSUs and Payees to each other via on or more qualified trust services. This would also benefit non payment services such as the AISPSP access to account to provide aggregation services for PSUs. However, the regulations cover known limited set of entities with a set solution, whereas this standard is looking to cover unlimited solutions with unlimited customers so, again, our view is most likely not.
Yes
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nickolas.reinhardt@aforeconsulting.eu
Nickolas Reinhardt
003225881303
Yes