Originally written by Timothy Adler on Small Business
Background to SCA and PSD2
The new EU Payments Services Directive (PSD2) came into effect in January 2018, bringing in new laws aimed at enhancing consumer rights and reducing online fraud.
A key element of PSD2 is the introduction of additional security authentications for online transactions over €30, known as Strong Customer Authentication (SCA). It means customers will no longer be able to checkout online using just their credit or debit card details, they will also need to provide an additional form of identification.
What is Strong Customer Authentication?
SCA adds an extra layer of security when customers make a payment online. Until now, shoppers have been able to simply enter their payment details and complete their purchase (although some businesses voluntarily choose to ask for further authentication).
SCA is designed to make paying online more secure and, consequently, reduce payment fraud.
In real terms, however, this means that more than 300 million ordinary European consumers will regularly have to change the way they buy online, introducing an extra layer of friction at the checkout for everyday transactions.
How does SCA work?
SCA is a form of two-factor authentication designed to prove that customers are who they say they are, with