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FCA extends SCA deadline by a further six months

FCA extends SCA deadline by a further six months

The UK's Financial Conduct Authority is to delay the implementation of strong customer authentication rules by a further six months in an effort to minimise disruption to consumers and merchants.

Initially scheduled for introduction on 14 September 2019, the rules - which demand a two-step verification process for all online purchases over EUR - have suffered a series of rolling setbacks amid mounting pressure from merchants and payments players.

In a statement, the FCA says: "This further 6-month extension is to ensure minimal disruption to merchants and consumers, and recognises ongoing challenges facing the industry to be ready by the previous 14 September 2021 deadline. The new 14 March 2022 deadline is the latest we expect full SCA compliance for e-commerce transactions.

"We previously agreed to give firms extra time to implement SCA for card-based e-commerce transactions in response to concerns about industry readiness, and to limit the impact on consumers and merchants. We also provided an additional 6-month extension in response to the coronavirus crisis.

"We welcome the implementation of SCA solutions which protect consumers while minimising the potential for disruption to customers and merchants.

"We still expect firms to continue to take robust action to reduce the risk of fraud."

Across Europe, where the rules have already been enforced, ecommerce merchants in France and Spain have experienced on average a 25% reduction in conversion rates, a 30% reduction in Germany, and up to 40% of transactions are being lost in Italy, costing merchants millions of Euros per month.

Galit Michel, VP of payments at Forter, says: "Across the board, merchants are struggling to manage the significant changes to their payments process, and we have observed a lack of issuer readiness, as well as low levels of customer co-operation with the increase in friction at the checkout. The desired impact of PSD2 was to reduce levels of fraud, but in reality, the outcome has been to frustrate customers and deprive merchants of much-needed revenue.

Comments: (4)

A Finextra member
A Finextra member 20 May, 2021, 17:311 like 1 like

Unlike the European Banking Authority who were totally dismissive of similar concerns raised by the various stakeholders a year ago, and who are now facing a real mess across the different MS in Europe with high decline and abandonment rates following their refusal to agree to any further xtension of the regulation, this seems a far more measured and practical approach to the adoption of SCA. The FCA ought to be congratulated for listening to industry concerns - particularly at a time when merchants need every sale they can get.

A Finextra member
A Finextra member 20 May, 2021, 21:041 like 1 like

"The desired impact of PSD2 was to reduce levels of fraud"

Fraud is now down 25% in France & Spain, 30% in Germany, and 40% in Italy.

Job done.

A Finextra member
A Finextra member 24 May, 2021, 08:46Be the first to give this comment the thumbs up 0 likes

UK merchants are likely best in class regarding SCA capability for e-commerce payments. What is the UK situation in remote banking customers? More gaps? 

Guillermo Olague
Guillermo Olague - GBG PLC - Madrid 07 January, 2022, 08:55Be the first to give this comment the thumbs up 0 likes

In Continental Europe, despite the general concern of conversion rates going down as per SCA implementation, they went up. So early adopters showcasing this drove the adoption instead of asking for more delays