What is SCA & How is it Affecting E-commerce?

In 2020, £376million was lost to online fraud. To tackle this, action is being taken to authenticate online transactions. How does this impact e-commerce business and online shoppers?

What is SCA?

Strong Customer Authentication (SCA) became a mandatory requirement for all online purchases on Monday 14 March. It requires customers to confirm their identity before a payment is accepted.

Online banking and e-commerce retailers are now using several methods to check that the person undertaking a transaction is the cardholder. They include requesting a password or PIN, sending a passcode via text or email or using fingerprint biometrics.

SCA lengthens the checkout process. As customers value speed and convenience, this has led to a rise in basket abandonment. In addition, if a customer is unable to prove their identity, the payment will be declined at the point of sale. This is not a situation relished by the retailer or the customer, however, this measure is in place to make it safer to shop online.

The FCA warns that:

“Any firm that fails to comply with the requirements for SCA after 14 March may be subject to supervisory or enforcement action, where appropriate.”

If you are unfamiliar with SCA and are unsure if your e-commerce business is compliant, further information can be found on the FCA website or from your payment merchant.