The UK's Financial Conduct Authority is to delay the implementation of strong customer authentication rules by six months in an effort to minimise disruption to consumers and merchants during the ongoing Covid-19 crisis.
The move to set back the date for implementation of the rules - which demands a two-step verification process for all online purchases over EUR30 - from 14 March 2021 to 14 September 2021, comes amid mounting pressure from the European payments industry.
The FCA's ruling is likely to be followed by national authorities across Europe.
The European Payment Institutions Federation (EPIF) earlier this month wrote to the European Banking Authority - which favours a December 2020 timeline - arguing for the possibility of "at least an additional six months".
The EPIF, which counts Visa and Mastercard among its members, argued that the "exceptional circumstances" of the Coronavirus pandemic is "putting an additional strain on the limited resources for all parties involved in the payment chain", making it difficult to concentrate on migrating to the new rules.
In a statement, the FCA says: "We expect UK Finance, as coordinator for the industry, to discuss the detailed phased implementation plan and critical path with all stakeholders and agree it with the FCA as soon as possible. In the meantime, firms should continue with the necessary preparatory activities such as robust end-to-end testing.
"After 14 September 2021, any firm that fails to comply with the requirements for SCA will be subject to full FCA supervisory and enforcement action."
The decision has been welcomed by Charles Damen, SVP product strategy, Worldpay Merchant Solutions, FIS.
“We believe a delay will be a welcome relief for merchants given the current situation with COVID-19, and will give them more time to become 'SCA-ready'," he says. "The manner in which payments are processed needs to fundamentally change ahead of a revised SCA deadline. Over 70 percent of payments processed today are not compliant with SCA so there is much for merchants to do in becoming “SCA-ready” well in advance of this deadline. At a minimum, for merchants this means implementing the capability to authenticate payments using the latest version of 3D Secure - but for those looking to ensure the best customer experience and to maximise acceptance rates, this will also mean implementing support for SCA exemptions and exclusions.”
