Businesses struggle to cope with major new regulation

Businesses struggle to cope with major new regulation

Zac Cohen

General Manager at Trulioo

Views 445

Businesses struggle to cope with major new regulation

07.10.2019 06:45 am

One of the most important pieces of legislation created to crack down on cyber fraud has come into force. Strong Customer Authentication (SCA) is a critical part of the Second Payment Services Directive (PSD2). This legislation comes at a time when fraud has reached critical levels across Europe, with the European Central Bank estimating the continent suffers from £1.3 billion in online fraud each year. This number is set to increase, as the number of people making payments via digital wallets internationally is expected to skyrocket from 2.3 billion to nearly 4 billion this year.

SCA mandates two-factor authentication for orders over £28, requiring customers to verify their identities based on at least two of the following indicators: something a customer knows, possesses or inherently is. Ahead of the September 14th deadline, however, regulators have conceded to the demands of payment service providers – granting an 18-month extension. According to the British Retail Consortium, institutions that were not ready were likely to create "significant disruption to online payments,” with an estimated 25 to 30 percent decline in the number of eCommerce transactions carried out.

Zac Cohen, General Manager at Trulioo, explains: “There is no doubt the new Strong Customer Authentication security measures will mean changes to how financial institutions and online traders deal with their customers. Security is a delicate balancing act, where on the one hand businesses face the risk of negatively impacting customer experience, and on the other are required to develop strong security standards to prevent fraud.”

“If a vendor is unable to authenticate or exempt a transaction in accordance with Strong Customer Authentication rules, then there is a significant risk that payment processors will decline the transaction, causing merchants to lose sales, negatively impacting revenue. To compensate, merchants would need to minimise friction in other areas, without removing the necessary barriers against fraud and abuse.”

Zac continues: “One technology that promises to smooth the way for Strong Customer Authentication is mobile. Two-thirds of the global population own smartphones, giving a digital identity to an increasing number of individuals. The pervasive nature of smartphones, together with integrated identifying capabilities, has changed the landscape of people’s everyday lives, becoming the guardians of our personal information such as bank account details and medical records.”

“Due to ease of use and convenience, payment companies can leverage advancements in smartphone technology as a way to detect fraud and verify identities. This approach adds an extra layer of security to identity verification, enabling successful compliance with the Strong Customer Authentication directive, while ensuring a secure experience for the end user”.

 

Latest blogs

Rowland Park Limeglass Ltd

Financial Research Innovation: the Next Information Advantage

An information advantage has become one of the most important competitive edges in the financial markets today. Receiving the right data, faster than competitors, is a significant driver of performance. However, while firms invested over $50 billion Read more »

Hamza Khan Suburbia

The Race for Alternative Data

'Data is the new oil.’ It’s a dramatic statement – and certainly a contentious one. Just as one publication makes the case for it, another rubbishes the concept. The first argument points out that data is becoming the world’s most valuable resource Read more »

n/a n/a

4 things to consider when expanding your home business in L.A

Running a home business has many merits. The days of leaving the house at stupid o’ clock in a bid to avoid the busy Los Angeles rush hour traffic are a thing of the past. You are your own boss and can pretty much do as you please. If you are Read more »

Suresh Vaghjiani Tribe Payments

Comment on the news of VISA acquiring Plaid from Suresh Vaghjiani, CEO and Co-Founder of Tribe Payments

“VISA acquiring fintech behemoth Plaid shows established financial organisations have recognised the API-driven financial data sharing space has been underserved. In the post-Open Banking era, as banks and fintechs look to shift from transaction to Read more »

Lina Andolf-Orup Fingerprints

Finger on the Pulse! Waving goodbye to a big year for biometrics

After years of predictions and goals set for “2020”, it feels quite surreal to have finally welcomed in the year that once felt so futuristic. And what a pivotal decade the “teens” have been for the world of biometrics! But before we share our 2 Read more »

Related Blogs

Sangeetha Narasimhan Ingenico ePayments

How SMBs can use peak sales days to their advantage Ingenico ePayments

For small businesses, Black Friday can loom in the calendar. It’s the ultimate international peak sales day that many merchants want to get in on, yet many feel too small to compete. While eCommerce giants like Amazon can make extreme reductions to Read more »

Natalie Katje ProgressSoft Corporation

Mobile Payments Interoperability and Lack Thereof

In several nations across the globe, the regulatory expectations and legal frameworks of the mobile payments environment have not yet been sharply defined. Many mobile payment service providers are not abiding by any well-defined regulatory Read more »

Sireen Lozi ProgressSoft Corporation

CBDCs: The Next Phase of Scrutiny

From banknotes, cards and mobile payments to cryptocurrencies and, more recently, Central Bank Digital Currencies (CBDCs), the world is witnessing breakthroughs in financial technology. Read more »

Eric Liebman Ingenico ePayments

How Consumer Demand is Shaping the Future of Travel Payments

Customer centricity has always been at the heart of travel businesses. But it is essential that businesses keep pace with both technological advancements and the evolving consumer demand as innovation in the sector is rapidly transforming the Read more »

Alan Koenigsberg Visa Business Solutions

Rising to the Global B2B Payments Challenge

In today’s fast-changing business environment, international organisations all over the world increasingly expect global access to finance in real-time. They also expect finance to be available in a way that works for them in any currency and Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel