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Online shopping anti-fraud scheme delayed by 18 months

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Written by: Emma Lunn
13/08/2019
Strong Customer Authentication (SCA) was due to be implemented by September but the Financial Conduct Authority (FCA) has given banks and retailers more time to prepare.

From 14 September 2019, new EU rules will start to apply that impact the way in which banks or payment services providers verify their customers’ identity and validate specific payment instructions.

The new rules, called Strong Customer Authentication (SCA), are intended to enhance the security of payments and limit fraud during this authentication process.

The new security procedure would normally see a passcode sent to a customer’s mobile phone at the point of checkout for online purchases of £28(€30) or more. Alternative forms of verification could include a thumbprint on a smartphone or voice recognition.

However, many banks and retailers appeared unprepared for the implementation date with consumer groups questioning how people who live in mobile blackspots, or who didn’t own a mobile phone, would receive the text messages.

Following pressure from the industry, the FCA has effectively granted an 18-month extension to providers who can show evidence they are “taking steps” to comply with the system.

Jonathan Davidson, from the FCA, said: “The FCA has been working with the industry to put in place stronger means of ensuring that anyone seeking to make payments is not a fraudster. While these measures will reduce fraud, we want to make sure that they won’t cause material disruption to consumers themselves, so we have agreed a phased plan for their timely introduction.”

Eric Leenders, managing director of personal finance at UK Finance, said: “Fighting fraud must be a priority for everyone and these new rules will be an important tool in protecting customers, helping keep them safe when they shop online. Today’s FCA plan, which supports our proposals for a managed rollout, will help the industry ensure a timely migration to SCA and result in the best outcomes for consumers while effectively balancing both convenience and security.

“We expect that providers will have appropriate solutions in place to allow their customers to authenticate themselves. This could mean your bank or provider using a text message, phone call, banking app or card reader to check your identity. Other methods are available and more are being developed that will make it even easier to shop more safely online in the future, including biometric technologies that could allow customers to be identified with something as simple as a thumbprint.”

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