EU’s Strong Customer Authentication Process Starts

As this Newsletter has reported previously, the EU Central Bank pushed for the “Strong Customer Authentication” (SCA) system for online payments. Our European colleagues at Ecommerce Europe expressed their concern at the system. However, it was agreed at the end of 2019 with an extension to give the time for the payment sector to adjust to these new rules until December 2020. Last year the impact of the COVID on the payment industry and on the retail and leisure sector, caused some Member States to adopt formal and informal gradual enforcement strategies to enable further testing and preparations. For example, France has been implementing gradual enforcement with soft decline, with the next deadline on 15 March for all transactions above 250€ to be compliant with SCA. Similar plans can be found in Germany and Italy.

The implementation and enforcement are accompanied in most countries by an attempt to monitor the evolution of the situation. It is difficult to get a clear picture of the impact, considering most of the data gathered still focuses on compliance rather than performance.However, increased failure rates have been witnessed all across the EU. The reason behind increase failure rates seems to differ – from infrastructure and technical challenges, the question of availability and usability of exemptions, 3D-secure enrollment, and so on. Further assessment of the impact, taking into account a wider range of metrics to ensure breakdown results and a bigger focus on performances, is needed to get a clearer picture of the situation and inform stakeholders and policymakers.