UK’s Financial Conduct Authority Postpones Implementation of Strong Customer Authentication by Another 6 Months

The UK’s Financial Conduct Authority (FCA) will be postponing the implementation of strong customer authentication (SCA) rules by another 6 months in order to minimize disruption for individual consumers and merchants.

First scheduled for release in September 2019, the SCA guidelines – which require a two-step verification process for online purchases over EUR – have experienced several setbacks amid increasing pressure from merchants and payment service providers.

The FCA has noted:

“This further 6-month extension is to ensure minimal disruption to merchants and consumers, and recognizes ongoing challenges facing the industry to be ready by the previous 14 September 2021 deadline. The new 14 March 2022 deadline is the latest we expect full SCA compliance for e-commerce transactions.”

The FCA added:

“We previously agreed to give firms extra time to implement SCA for card-based e-commerce transactions in response to concerns about industry readiness, and to limit the impact on consumers and merchants. We also provided an additional 6-month extension in response to the coronavirus crisis. We welcome the implementation of SCA solutions which protect consumers while minimizing the potential for disruption to customers and merchants.”

The FCA also mentioned that they’re still expecting companies to continue to take “robust” action in order to reduce the risk of potential fraud.

Across Europe, where these guidelines have now been enforced, digital commerce merchants in France and Spain have reported around a 25% reduction in conversion rates, a 30% reduction in German markets, and as much as 40% of transactions are reportedly being lost in Italy, leading to millions of Euros per month in losses for local merchants.

Galit Michel, VP of payments at Forter, stated:

“Across the board, merchants are struggling to manage the significant changes to their payments process, and we have observed a lack of issuer readiness, as well as low levels of customer co-operation with the increase in friction at the checkout. The desired impact of PSD2 was to reduce levels of fraud, but in reality, the outcome has been to frustrate customers and deprive merchants of much-needed revenue.”

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