Among other things, PSD2 aims to promote the security of payment services. One measure introduced with PSD2 that addresses this is that online transactions with payment cards must henceforth be authenticated using strong customer authentication ("SCA"). iDEAL is a payment method that basically amounts to an online transaction with a payment card.
Coauthor: Van der Beek, Annemieke
SCA uses at least two different factors, which can be knowledge (such as a password or PIN), possession (such as a bank card or a cell phone linked to a bank account) or an inherent characteristic (such as the biometric characteristics of a fingerprint or voice). Again, take the example of iDEAL: this payment method has been using authentication according to SCA rules for years, so for many Dutch people, PSD2 does not bring any change in that respect. In Europe, however, there are also payment methods in which authentication according to the SCA rules does not yet take place.
Formally, the tightened rules for authentication have been in effect since Sept. 14, 2019, but in the run-up to this date, the tightened rules turned out to come too soon for some banks, payment institutions, but also online stores. For example, the new rules affect how online stores accept online card payments. Check out systems of online stores must be technically equipped to support SCA. This did not yet appear to be sufficiently the case.
Following persistent concerns about this from the industry, the European Banking Authority (EBA) published an opinion on October 16, 2019, in which it announced that it would postpone enforcement of the SCA rules until December 31, 2020. In an earlier opinion issued by the EBA on June 21, 2019, the European regulator had still announced that national supervisors were allowed flexibility in their supervision of the SCA rules, but different interpretations within Europe only led to more ambiguity within the industry. The EBA has now put an end to this uncertainty by setting a deadline of December 31, 2020. This means extra time for market participants to make every effort to be ready in time for SCA.
More articles by Kennedy Van der Laan
This article can also be found in the PSD2 dossier
