Opportunities are also being explored for the use of electronic identification and certificate-based solutions to meet the requirements for strong customer authentication at account login and initiation of payment transactions. Mobile technologies With the advancement of technologies, the smartphone is being established as an increasingly universal tool capable of combining a wide variety of functions. Nowadays the smartphone is also 1/3  BIS central bankers' speeches  becoming a tool for initiating payments. This is possible thanks to services like digitalisation of payment cards, the use of digital wallets, and mobile banking applications. In recent years, work has been done towards the potential use of smartphones as devices for receiving physical card payments. This has become possible due to technical 2 These standards1 developed by the Payment Card Industry Security Standards Council. standards allow the use of NFC-enabled mobile devices, such as smartphones and tablets, for accepting contactless payments and also for the payer to enter a PIN code on the screen of the mobile device. Thus, mobile devices are becoming a sort of software POS terminals capable of accepting payments with payment cards and other payment instruments integrated into the mobile phone. We also already have payment service providers that offer this software POS service. This will make contactless payments easier and more convenient to the customers and merchants in Bulgaria.
Security of payments The rapid development of e-commerce in recent years and the increased use of electronic channels to initiate payments pose new challenges related to ensuring the security and customers’ data. As of September 2019, it has become mandatory in Europe to implement strong customer authentication. This means that when an electronic payment is initiated, at least two independent elements from different categories – knowledge, possession and inherence – must be used in the process. In the case of remote payment transactions, e.g. via internet, an additional requirement is introduced to perform so-called dynamic linking – linking the code for each transaction to a specific amount and a specific payee. These requirements are implemented by the payment service providers in our country. For the practical implementation of these regulatory requirements, new technologies are again coming to the rescue. Recently, biometric authentication has shown great potential by providing verification of elements characterising the user: fingerprint, iris scanning, facial recognition, etc. Many payment service providers in Bulgaria have already introduced similar customer identification methods using mobile banking applications. Apart from convenience, this leads to a significant increase in the security of the payment process, allowing the use of biometric data for customer identification. On the occasion of the forthcoming review of the Second Payment Services Directive, a comprehensive assessment of the impact of strong customer authentication on the level of payment fraud is to be carried out.