Important Things To Know About Strong Customer Authentication

 

Strong Customer Authentication (SCA) is a core regulation that payment services need to abide by under the new European Revised Payment Service Directive, PSD2.  With the rise of open banking and online payments, governments implemented this technology to reduce fraud, to help secure the transaction of digital payments, and also to protect consumers across digital channels.

SCA requires customers to verify their identity before payment transfers can occur online, whether with an institution, financial service, or third-party business. Authentication offers an extra layer of security for customers as well as payment service providers. Since PSD2 simplified payments systems along electronic channels, it opened up banking platforms into a single market.

As a way of combating the potential fraud that is found with online services, Strong Customer Authentication forces banks to uphold a standard of security by verifying users before any payments are authorized. SCA requires that all banks or financial service firms to collect at least two out of three verification factors, namely possession  (a unique item that only the user has or owns), knowledge (something that the customer knows, or knowledge only they are privy to), and inherence (something that the customer is and uniquely identifies their physical state).

Under Strong Customer Authentication regulations, these authentication conditions must integrate within your checkout flow before you can accept or conduct payment transactions for your customers. If it happens that a user does not meet the criteria, your service or bank must decline all initiated payment requests. Remember that the two factors you choose as authenticators need to be from different categories in case of a breach (for instance, if a phone is stolen).

For more information on Strong Customer Authentication and how you can use it in your business, visit our website at https://loginid.io/

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