This information applies to Business accounts.
Historically PayPal supported the capability for some merchants to allow users to amend orders in the context of checkout to add (or remove) services like shipping fees or taxes. While the user consents to the final amount in the merchant Checkout, this wasn't completed in a session with PayPal.
Example:
PayPal obtains authorisation from each customer for the maximum amount of transactions before redirecting a customer to the merchant. The transaction gets declined if the merchant captures more than the authorised amount.
This impacts all global merchants (domestic and international transactions) that sell to PayPal buyers from the countries subject to PSD2 (i.e., EEA).
Strong Customer Authentication (SCA) requirements, which are part of the Second Payment Services Directive (PSD2), mandate additional authentication measures and restrictions to be performed on electronic transactions involving consumers (buyers) from the PSD2 countries.
The changes are in response to the principles set by The European Banking Authority (EBA) for transactions where the final amount is unknown.
This impacts Merchants globally (for domestic and international transactions) selling to buyers from the EEA (PSD2 countries).
Any merchant selling to buyers from the EEA region (PSD2 countries) will be impacted. The impact is determined by the consumers' (or buyers') country and not by the merchant country.
The impact is only on PayPal wallet transactions, i.e., merchants integrated on PayPal Branded XO. This can be direct PayPal integration or through Braintree. There's no impact on Venmo transactions because Venmo is not offered to EU consumers. For direct card transactions (Unbranded DCC), the card issuer will automatically reject transactions above what the consumer approved during the 3DS review.
No immediate integration change is needed as long as the merchant is redirecting the buyer back to PayPal for a re-review in the event of PayPal declining the transaction with the above-mentioned error codes.
Unfortunately, we can't exclude any merchants from this compliance change. Here, you can learn more about the second Payment Services Directive (PSD2) regulation.
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