PSD2 and Strong Customer Authentication

Strong Customer Authentication will affect nearly every business operating within the European Union. Are you prepared to meet these new requirements?

Over the past decade, there has been a steady increase in the number of European consumers who participate regularly in e-commerce. As more consumers are becoming comfortable completing transactions with the click of a button, it is imperative that businesses make sure their online payment platforms are secure. To that end, the second Payment Services Directive (PSD2) introduces Strong Customer Authentication, a required method of authentication to protect online consumers’ transactions and information.

What is Strong Customer Authentication?

Strong Customer Authentication (SCA) is a thorough process for authenticating online transactions. As mandated by PSD2, SCA consists of payment authentication through at least two of the following three ways:

• Something the consumer knows, such as a password or PIN
• Something the consumer possesses, such as their mobile phone to receive a one-time code
• Something that is part of the consumer, such as facial recognition or a fingerprint

By completing these authentication steps, transactions will be more secure and consumers will be less susceptible to fraud.

Who will be affected by these new requirements?

SCA will be mandatory for authenticating online payments for companies doing business in Europe. Infrastructure to meet these requirements must be in place by 14 September 2019.

Are there any exceptions for these requirements?

There are only a handful of exemptions for SCA. These exemptions will help keep online shopping fast and easy for consumers while still ensuring their transactions are secure. A few exemptions include recurring transactions and subscriptions, mail or telephone orders, and low value transactions (under 30 EUR). Additionally, consumers can opt to whitelist merchants of their choosing that they would like to exclude from SCA through their bank.

How can I be prepared to meet SCA requirements?

Zion Payments will help our clients ensure they stay compliant. While there is no need to take immediate action, we will provide information and resources to our merchants who will be affected by PSD2 and SCA.

If you’d like more information about PSD2 and Strong Customer Authentication, visit the European Payments Council website.