New Regulation Will Shake up Online Card Transactions
On September 14th, 2019 new European regulation will change the landscape of online card transactions, and we are here to explain what this new regulation is and what it means for your online business.
Strong Customer Authentication (SCA) is one of the latest European requirements set to take place in less than 60 days to make online payments more secure. The authentication is made through two or more factors that are required at the time of an online purchase. These factors are meant to be completely independent of one another in that one wouldn’t compromise the other.
Below are the three authentication factors laid out by the Regulatory Technical Specifications:
- Something you know – a password or a pin
- Something you have in hand – a phone or credit card
- Something that you are – this is usually a fingerprint
In the past, online customers could simply enter their name, card number, expiration date, and the CVS code for credit card authentication. Now, as a requirement of the European Union’s growing Revised Directive on Payment Services (PSD2), online users will be required to provide more information for a “card not present” transaction.
What type of transactions are affected by SCA?
Big picture; most online transactions will fall under the SCA. The following are example situations in which SCA would be required:
- Initiating electronic transactions
- Accessing payment account info online
- Any activity through a remote channel that identifies as a risk of payment fraud
Basically, SCA will apply to almost any transaction that is not face-to-face!
In most cases, two-factor authentication will be mandatory, while some cases will require more than two-factor authentication.
What to look out for in the U.S.
Even though the regulations are coming from the European Economic Area, there a few ways in which this will affect the U.S. market. The most obvious being, if you conduct business in Europe, you have a direct connection to this regulation. If you are not, expect to see changes make their way to the U.S. in the coming years as SCA is rolled out in Europe.
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