News Alert: Retailers unprepared for upcoming SCA regulations

The UK’s Financial Conduct Authority (FCA) has confirmed its intent to implement Strong Customer Authentication (SCA) in online retail. This will apply to online shoppers whose purchase is of more than £27 in a single transaction and will require shoppers to relay passwords sent to their mobile phone. However, this change is not welcomed by a group representing shops, who have sent a letter to the FCA warning them of possible negative implications.

The letter states that three quarters of small online retailers do not have the correct software to allow the two-step verification and that these should be given more time to get ready for the change. The letter also warns this change will lead to customer confusion, abandoned purchases, a decline of valid transactions and poor customer experiences.

Jason Tooley, Chief Revenue Officer at Veridium, however, highlights the fact that consumers will benefit from the new regulation by being able to enjoy a more secure way to shop online and biometric authentication being able to fill any current gaps in the SCA regulation.

Jason comments: “Payment service providers have had nearly two years to prepare since the initial announcement, and there is no valid excuse for the delay in its enforcement apart from an unwillingness to participate. Consumer security should be of paramount importance and this change by the FCA will add a new layer of security which will not only protect merchants and customers but also boost consumers’ confidence in making online purchases.

Jason continues “However, deploying without using biometrics as additional factors within a multi-factor solution would be a retro step and would be very expensive to implement, hence the feedback from retailers which is the same as we saw from banks and fintechs around the PSD2 SCA requirement, where the FCA removed the deadline.”

“While there is a danger that the SCA may bring possible challenges to businesses and consumers, the increased availability of biometric technology has the potential to alleviate the technical challenges the new regulation poses and actually increase customer satisfaction by creating a more secure and frictionless experience”, Jason concludes.