PSD2’s Strong Customer Authentication is here. Payment authentication is now core in Europe, and without successful authentication, your authorization rates may suffer.
PSD2 is the 2nd Payment Services Directive established by the European Banking Authority (EBA). This directive is designed to drive payment innovation and data security by reducing competitive barriers, mandating new security processes and encouraging standardized technology.
Benefits of PSD2 are consumer-focused, meaning issuers and merchants need to be prepared for new challenges.
There are many layers to PSD2, including the SCA requirement.
SCA (Strong Customer Authentication) is a new PSD2 mandate that went into effect 14 September 2019.
The goal of this mandate is to reduce fraud and ensure that merchants and issuers in the European Economic Area (EEA) are validating the consumer for all electronic payments.
The SCA requirement is essentially a two-factor authentication model to ensure the consumer really is who they say they are.
While the PSD2 SCA mandate originates in the EEA, the impact spreads much further. Not only do merchants based within the EEA have to comply, any merchant or issuer who sells to consumers in the EEA must meet the requirements as well.