All eyes are on the world’s fifth largest economy as the first quarter heads to an end. After a long and winding road, two major changes are set to shake up Northwest Europe, changes that will impact how business is conducted around the globe. First and foremost is Brexit, whereby the UK leaves the European Union. Much less-hyped but more specifically relevant to our industry is the new internet age verification requirement, to go into effect across the UK in mid-April. We’ve spent many hours preparing for these changes, making sure our merchants remain on solid ground. What does it mean to you and how will these developments impact the industry? Let us break down what you need to know during these transitional times.
There are more than half a billion active websites live on the internet. To visit one featuring adult content or selling adult products, you must yield to an age verification warning. Most are passive and just ask you to enter your birthdate or check a box before gaining access to the content. This will no longer be sufficient come mid-April when a new age verification law takes effect, impacting all websites accessible from within the UK. Under the Digital Economy Act, approved last year, any consumer that accesses an adult site must be verified before they can see any type of content- even on free sites. Consumers will have to provide two forms of validation proving they are over 18 years of age. Acceptable forms of age verification include credit/debit cards, voting data, phone authentication via SMS and government-issued identification such as a passport or driver’s license. In-person verification would require an Age Verification Card, sold at shops across the UK.
In-person verification would require an Age Verification Card, sold at shops across the UK.
Last June, Segpay partnered with AV Secure to provide a solution whereby consumers can get pre-approved. Consumers who’ve paid for services via Segpay in the past can speed through the process with a quick step of validating their credit card number. The process also allows thousands of existing merchants to ensure their paying clients will be verified without having to re-enter their personal details.
All adult site credit card processors will be held accountable by their acquirers and card brands to make sure that merchants have a solution in place. Segpay merchants will have to show compliance with the new age verification requirement before going live. While the law is UK-specific for now, the rest of Europe, and the world, are watching and could soon adopt the same or similar age verification requirement.
The UK is set to exit the European Union on March 20th, 2019. If no deal is made before then, there will be a hard break, with the UK on its own, immediately, with no transition period. This signals many changes for payment institutions, impacting processing in the EU and UK. For example, payment service providers will need to have both an EU and UK setup. UK merchants will process through a UK acquirer and UK payment facilitator, and EU merchants will process through an EU acquirer and EU payment facilitator. To continue with smooth, uninterrupted transactions, companies like Segpay will be required to have entities in both the EU and UK, with payment institution licenses in both regions.
Since the Brexit vote in June 2016, we’ve been working on solutions to these challenges. We have an Irish corporation to handle EU merchants, which is currently in the process of obtaining an EU payment institution license. We’ve reached out to all of our acquirers to make sure that if there is a hard break, there will be no interruption in payment services or settlements to merchants. Segpay currently has both EU and UK acquirers in place to process all transactions. British Prime Minster Theresa May has proposed a seven-month transition period to help acquirers in the EU and UK ease into these changes. The hope is that Parliament will agree and allow the transition period to keep things on track.
These are signs of changing times in the UK and across the web. The next few months could have some bumps in the road. There’s a lot of uncertainty surrounding these changes, particularly around Brexit and its aftermath. We’ve put in many hours making sure our merchants and partners are ready for those uncertainties, so the transitions into Brexit and age verification are as smooth as possible.