Paving the way for SCA

Over the last few decades, we've seen payments across Europe undergo a rapid transformation.

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And we've experienced the benefits of some of these changes during the COVID-19 pandemic. Thanks to advancements in technology we've been able to shop from the comfort of our couches and when venturing in-store benefit from contactless and contact-free payments.

Since the introduction of the first point-of-sale (POS) terminal, back in 1979, we've headed towards an increasingly digital payments landscape. But, as digital activity grows so does fraud, and we're continually needing to find new ways to keep our money safe.

The Payments Service Directive Two (PSD2) has been a leap towards implementing new levels of security as we try to navigate this evolving beast. Later this year, and into 2021, we'll see the next steps of this legislation being enforced.

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What is SCA?

Strong Customer Authentication (SCA) was born out of PSD2. It affects all merchants that operate online within the EU who are expected to be fully compliant with the regulation by 31st December 2020, or 14th September 2021 in the UK.

Whereas in the past, shoppers have only had to enter their financial details to complete a transaction, under the new legislation they will need to authenticate their identity. This means there will need to be an extra layer of ID security during the checkout process and this must be two of the following:

Using these identity categories during the payment process is known as two-factor authentication.

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Won’t this cause friction during the payment process?

Implementing SCA won’t increase the amount of friction being experienced at the checkout – it was created to reduce it. In fact, many of your customers will already be familiar with two-factor authentication, which was introduced during the implementation of 3D-Secure 1.0 (3DS1) with protocols such as Verified by Visa.

As part of PSD2, 3D Secure 2.0 (3DS2) has been introduced, which includes SCA. This aims to streamline the process and remove the need for customers to be redirected to annoying pop-up pages, if not necessary, while providing exemption for certain payments. Only if the payment is suspicious will the customer be asked to input any additional layers of authentication. As a result, there will be much less friction during the checkout process.

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Getting started

 Despite the advantages of SCA and 3DS2, if the right technology isn’t implemented properly in the right period of time, it could be detrimental to conversion rates, as 13% of transactions could be abandoned in 2020 without the right SCA technology.

What’s more, more than 75% of merchants in the UK are unaware of SCA requirements and less than 5 percent are currently using 3D Secure 2.1 – the technology needed when applying SCA.

To prevent huge disruptions to a great number of businesses, these stats need to change. That’s why we’ve created our new SCA guide which helps businesses know the ins and outs of the regulation and where to start when implementing it. It goes into detail about all the information that merchants must know about it, from SCA exemptions to whether COVID-19 will affect it.

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To learn more, download our SCA guide here.

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