UK Finance : eCommerce Customer Authentication

August 12, 2020

The UK’s Financial Conduct Authority has authorized an extension for “implementation of strong customer authentication in respect of e-commerce payments.” The decision, made in April, is accompanied by a three-phase implementation plan which aims to have SCA compliant measures in place by the September 2021 deadline.

UK Finance is heading the migration to SCA in the UK and “contemplates…all participants will be compliant and ready for testing by next May.” Per EU payment regulations, payment service providers are required to maintain robust customer authentication for certain transactions, with specifications in place for remote electronic payments, as well (linked payment to a specific amount and specific payee).

While the measures are widely accepted, fulfilling requirements within the e-commerce industry has proven a difficult and slow-moving process, especially in the wake of the pandemic. All aspects of the payment chain— “including merchants, gateways, acquirers and issuers”— must be equipped with the appropriate systems for the entire process to run smoothly.

Deadline Extensions

In October 2019, the European Banking Authority authorized an extension of the SCA deadline for e-commerce payments. While the extension is set to expire this coming December, the Banking Authority has thus far ignored renewed requests for a further extension.

Amid the Covid-19 crisis, however, the FCA announced in April to push its deadline to September 2021, stressing the need for a phased implementation plan to meet the new deadline.

Phase 1– Development (2020)

Phase 2– Market Readiness (1 Jan- 31 May 2021)

Phase 3– Full Ramp Up (1 Jun- 13 Sep 2021)

See more information on the phases here.

The FCA states that failure to comply with the new deadline come mid-September 2021 will result in “full FCA supervisory and enforcement action.” It has, given the circumstances, offered a more relaxed approach to contactless and online banking for the time being in lieu of the pandemic.

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