The FCA confirms Strong Customer Authentication (SCA) delay in the UK until March 2021

UK businesses have been given some much-needed breathing room from impending Strong Customer authentication (SCA) changes, following the announcement on 13 august 2019 that the Financial Conduct Authority (FCA) has formally endorsed recommendations to delay SCA enforcement until March 2021*.

The delay, which the FCA has termed “phased implementation”, means enforcement action will not be taken against businesses until after the 18-month grace period, “where there is evidence that they have taken the necessary steps to comply with the plan [as agreed with card issuers, payments firm and online retailers].”

The UK’s financial services industry body, UK Finance is looking to set up an “industry Programme Management Office (PMO)” to communicate the plan more broadly and to coordinate the rollout. 

The 18-month phased implementation will begin on the original SCA rollout date of 14 September 2019.

EBA standing firm on SCA

While the extended grace period gives businesses in the UK additional preparation time, the delay only applies to payments taken from within the UK itself.

That means if a UK business collects any cross-border payments from elsewhere in the European Economic Area (EEA), SCA will still apply to those. 

Other national regulators in the European Economic Area (EEA) may follow suit, but as yet none have communicated clear plans to do so.

The European Banking Authority (EBA) has so far ignored calls for a continent-wide delay, but has acknowledged that regulators may need to provide additional time. Unless other national banking authorities follow in the footsteps of the FCA, the original 14 September deadline will still apply to at least some of the transactions of the vast majority of online businesses in Europe.

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Use the time wisely

Assuming the UK delay is relevant to your business, the news simply provides businesses with clarity on the timeframe, as opposed to an opportunity to simply forget about SCA altogether.

E-commerce is no longer in danger of dropping off a cliff in October; which is good news for consumers and a huge relief for online retailers. But the industry must not simply kick the can down the road. It needs to start planning for SCA today or we’ll be facing the same panic in 18 months’ time. Businesses must use this time wisely – to properly evaluate and improve the entire consumer shopping and payments experience. That means providing an international payments solution that offers security, convenience and choice for consumers.

Additionally, the clear deadline that the FCA has given indicates that additional grace periods in the UK are highly unlikely. 

Minimise SCA disruption with GoCardless

Even with intentions to make the most of the 18-month delay, businesses will inevitably find that the time will evaporate quickly, especially for larger businesses with multiple intertwined payment flows.

One way to minimise the development and implementation of technology to effectively meet SCA requirements is to leverage exemptions and payment methods that are entirely out of scope.

Merchant-initiated transactions, including the paperless Direct Debits that GoCardless uses to collect payments, are considered out of scope. This includes all recurring payments of any value or frequency, including the initial payment.

Therefore, SCA will not apply to payments through GoCardless. Our customers will not need to implement any additional SCA authorisation methods for payments collected using GoCardless.

To learn more about how GoCardless can help your business effectively navigate SCA, get in touch with one of our Direct Debit experts today. *On 30 April 2020, an additional 6 months was granted in response to the exceptional COVID-19 circumstances, meaning the current deadline for implementation is 14 September 2021.