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The impact of regulation on retail payments security: Evidence from Italian supervisory data

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  • Cologgi, Massimiliano

Abstract

This paper assesses the impact of the new strong customer authentication (SCA) requirements introduced by the revised Payment Services Directive (PSD2) on the security of remote payments in Italy. We find that the regulation was effective in improving remote payments security, saving consumers several million euros in terms of less fraud on online transactions. Using a model for panel data, we estimate that SCA reduces the risk of fraud by 60 percent for remote payments made by card and by 80 percent for e-money payments. We also find that the transactions for which the regulation provides an exemption from SCA requirements are relatively safe.

Suggested Citation

  • Cologgi, Massimiliano, 2023. "The impact of regulation on retail payments security: Evidence from Italian supervisory data," Finance Research Letters, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001721
    DOI: 10.1016/j.frl.2023.103799
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    References listed on IDEAS

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    More about this item

    Keywords

    Payment fraud; Remote payments; Cross-border payments; Strong customer authentication;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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