PSD2 is Coming — We’re Already Good to Go

September 11, 2019, Kyla Steeves
SCA compliant. Traveler with backpack, making payment with card on smartphone.

September 14th is quickly approaching, and Checkfront is ready for what that brings. As part of the revamped Payment Services Directive (PSD2), there’s a new regulation for verifying online payments called Strong Customer Authentication (SCA). And we’ve officially upgraded before the enforcement deadline to work with the modified checkout flow required.

So if you’re a business in the European Economic Area (EEA), you’ll want to keep reading to find out how SCA impacts you.

A little refresher on SCA

Let’s catch you up on SCA quickly. Over the last few years, the European Commission has taken steps toward increasing the security of online and cross-border payments, while promoting the use of open banking. First passing PSD2 on November 16, 2015, and repealing the original PSD on January 13, 2018, Strong Customer Authentication is set to take effect on September 14, 2019.

What is SCA exactly? Defined by the Regulatory Technical Specifications (RTS), this new European regulation requires multi-factor authentication for online transactions made with businesses in the EEA, by customers with banks in the EEA. Going forward, that means your payment gateway must use two of the following factors at checkout:

Multifactor authentication for SCA, something the customer knows, something the customer has, something the customer is.

At this time, 3D Secure helps apply online payment verification. But it involves an extra step where the customer is redirected to give additional information before completing payment. Since this can hurt conversions rates, 3D Secure 2.0 is currently rolling out and expected to provide a frictionless authentication experience.  

What to expect going forward

Over the coming months, we expect phased enforcement of the new SCA requirements. However, European banks can start declining payments that aren’t SCA compliant as soon as the deadline. Of course, there will be exemptions — like low-risk transactions, payments below 30 Euro, and trusted beneficiaries.

That said — Checkfront is already on top of this for you. Our team will let you know if you need to do anything, but in most cases, no action is required on your end. We’re happy to be part of making online transactions safer for you and your customers. For any questions about PSD2 and SCA, please contact support.

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*Note: this article should not be considered legal advice. Should you have questions or concerns about how your business is impacted by regulations and laws, we strongly recommend consulting with a legal professional.

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