The Financial Conduct Authority (FCA) has confirmed its plan to delay Strong Customer Authentication (SCA) by 18 months.
According to the FCA, the delay reflects the opinion of the European Banking Authority (EBA) who said more time was needed.
Jonathan Davidson, Executive Director for Supervision, Retail and Authorisations, said: “The FCA has been working with the industry to put in place stronger means of ensuring that anyone seeking to make payments is not a fraudster.
“While these measures will reduce fraud, we want to make sure that they won’t cause material disruption to consumers themselves. So we have agreed a phased plan for their timely introduction.”
Today’s confirmation follows reports last week from the Financial Times that the FCA would be implementing a delay.
The news has been welcomed by businesses across the UK who were not ready to meet the original deadline.
Michal Kissos Hertzog, CEO of digital bank Pepper, said: “With the delay of the ‘strong customer authentication’ regulation, many in the online payments and e-commerce sectors in the UK may be breathing a huge sigh of relief today.
“Yet there must be a realisation that online payments are changing all the time. Due to this, the value proposition and user experience must evolve constantly too, especially around ensuring it is safe and secure.”
SCA: Companies need to be prepared
Hertzog explained even though SCA may seem like a burden, it is essential for creating a safe online shopping environment.
“Today’s delay should really serve as a wake up call. Instead of updating systems to be ready for the SCA by adopting better, faster and more agile technology, some have taken the ‘out of sight out of mind’ approach.
“However, implementing a digital core is crucial, as it enables any company to adapt, at speed, to consumer needs and changing regulations in an effective way.”
The original deadline for SCA was September 2019 but lack of preparation has resulted in this date being pushed back.
Duncan Barrigan, VP Product at GoCardless, has warned that even though businesses have extra time, immediate preparation is necessary.
He said: “E-commerce is no longer in danger of dropping off a cliff in October. This is good news for consumers and a huge relief for online retailers. But the industry must not simply kick the can down the road.
“It needs to start planning for SCA today or we’ll be facing the same panic in 18 months’ time. Businesses must use this time wisely to properly evaluate and improve the entire consumer shopping and payments experience.
“That means providing an international payments solution that offers security, convenience and choice for consumers. We may have dodged an SCA-shaped bullet, but the showdown will come around quicker than you think in March 2021.”
The FCA will not take action against firms who do not meet SCA requirements after September 2019. However, businesses must provide evidence that they are taking the necessary steps to comply with the plan.
By the end of the 18-month period, the FCA expects all businesses to have made the necessary changes.