What is Strong Customer Authentication?

 

Strong customer authentication (SCA) is a requirement of Europe’s revised Payment Services Directive 2 (PSD2) mandate to increase security and also minimize fraud risk around electronic payments. The aim of PSD2 is to protect consumers, promote banking innovation, and facilitate safer cross-border European payment services. SCA came into effect in 2019. With approval by the EEA, the implementation deadline was pushed to December 31, 2021.

Strong customer authentication requires two factor authentication as well as dynamic linking (meaning a clear and unforgeable message to the consumer) to ensure the consumer is fully informed and makes an active decision to authorize a payment transaction. In other words, to be able to successfully process a payment under the new rules, banks are supposed to ask customers for at least two authentication factors, for example a PIN or password entered on their mobile device would constitute two factors, which are knowledge and possession.

With a simple SCA loginID process, it is possible to take the customer from mere interest in your service or products, to settling a payment in a matter of minutes. With strong customer authentication, using new services is a lot easier, such as top-up and pre-paid credit cards, spending analytics,  self-service management of geographical limits and merchant or transaction specific credit cards, special offers, and more. All these services require strong customer authentication to be set-up and used.

With a poor and cumbersome SCA (like SMS+OTP + password), the use of new and innovative services becomes much harder. For the consumers, this technology is a lock with a secure key to protect their money. Getting a lock with a secure and easy to use key is a good way to establish trust with the consumers. The easiest as well as most secure key gets most used, where well implemented SCA provides the opportunity to become card number 1.

For more information on strong customer authentication, visit our website at https://loginid.io/

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