EBA · 2018_4045 Final Q&A

Transaction Risk Analysis (TRA) exemption – Frequency of recalculation of fraud rate

Regulation
Directive 2015/2366/EU (PSD2)
Article
98
Topic
Strong customer authentication and common and secure communication (incl. access)
Submitted by
Other
Submitted
2018-06-28
Answered
2019-06-07
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Should the fraud rate, in accordance with Article 19 of the RTS, be recalculated every day using the trailing 90 days of data, or should it be recalculated once every 90 days (using the trailing 90 days of data)? If the fraud rate should be recalculated once every 90 days (using the trailing 90 days of data), can the calculation periods be aligned with calendar quarters? (e.g. the fraud rate for use during Q1 2020 (01-Jan-20 to 31-Mar-20) would be based on fraud data for Q4 2019 (01-Oct-19 to 31-Dec-19).

Background

The RTS state that the fraud rate for use in the TRA exemption should be calculated on a “rolling quarterly basis (90 days)”. It is not clear if this means that the fraud rate should be recalculated every day using the trailing 90 days of data, or should be recalculated once every 90 days (using the trailing 90 days of data).

Answer

Article 19(1) of the Commission Delegated Regulation (EU) 2018/389 refers to a calculation on a “ rolling quarterly basis (90 days) ”. Article 20(2) of the Delegated Regulation states that payment service providers should cease applying the exemption if the “ monitored fraud rate exceeds for two consecutive quarters the reference fraud rate applicable for that payment instrument or type of payment transaction in that exemption threshold range ”. Accordingly, Articles 19(1) and 20(2) of the Delegated Regulation should be read together in a systematic way, such that the calculation on a rolling quarterly basis (90 days) should be interpreted as a calculation once every calendar quarter.

Original source: European Banking Authority, Q&A ID 2018_4045

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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