Payments briefing: How will Covid-19 affect your preparations for Strong Customer Authentication? | Fieldfisher
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Payments briefing: How will Covid-19 affect your preparations for Strong Customer Authentication?

John Worthy
As the impacts of Covid-19 ripple through the global economy, the UK regulator, the Financial Conduct Authority (FCA) has announced a further six-month delay to the full effects of SCA until September 2021. As outlined in our February 2019 briefing (which can be accessed here), the new SCA rules require payment services providers to use SCA for e-commerce transactions. The initial deadline for implementation in e-commerce transactions was 14 September 2019. As the deadline approached, many European regulators (including the FCA) announced plans to delay enforcement, as it was looking unlikely that payment service providers and merchants would be ready (see our note from September for more information). Following these announcements, the European Banking Authority (EBA) also extended the deadline to the end of 2020.

In its latest move, the FCA has responded to calls from the industry by announcing plans to delay the enforcement of SCA in online payments for a further six months in a bid to reduce disruption to the payments industry and merchants during the Covid-19 crisis. Although officially the SCA rules are in force, the effect of the FCA position is that enforcement measures will not be applied until the revised timeline has passed.

At present, while the UK is taking a lead on this point, the EBA has so far not followed suit. In its last statement on the matter in March, the EBA was still pushing for its end of 2020 deadline.

What does this mean in practice?

Right now, this will no doubt be welcome news for UK retailers and payment services providers. This extension means that full SCA implementation can be deferred, allowing businesses to focus on the immediate pressures of supporting e-commerce activity during Covid-19. However, where payment services providers and merchants have pushed back their implementation plans already, they will need to schedule the work in good time to meet the revised deadline.
Looking at cross-border payments, payment services providers and retailers were already preparing to deal with varying deadlines. Given the FCA's further extension plans,  businesses operating across several EU member states face challenges managing which deadlines to adhere to and how best to navigate the different rules applicable in each territory. 

Either way, clarification from the EBA would be welcomed to ensure the harmonisation originally intended can be achieved and payment services providers and retailers across Europe can work towards a consistent deadline.

The Fieldfisher Payments and Cards team is advising clients on the effects of the strong customer authentication rules.

Please contact John Worthy or your usual Fieldfisher contact if you would like further guidance.

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Areas of Expertise

Cards and Payments

Related Work Areas

Financial Services