What does SCA mean for recurring payments?
If you’re a merchant based in the European Economic Area (EEA), you might already be aware of Strong Customer Authentication (SCA). If you’re not, we’ve written a brief overview of what the new European PSD2 law means for subscription businesses. In a nutshell:
- SCA is part of European PSD2 regulations, which aim to increase the security of electronic payments and account management, as well as reduce payment fraud
- SCA comes into effect on 14 September 2019
- If your business uses a European payment provider to serve customers within the EEA, SCA requires additional proof of identity from your customers when they make certain types of payments
Many businesses are concerned that the extra security measures posed by SCA will increase friction at checkout, leading to a drop-off in conversion. For businesses that take recurring payments, there are broadly three major factors that determine how SCA will affect you. And there are a number of exemptions and out of scope transactions that could help minimise impact on conversion rates.
Ahmed Badr, General Counsel at GoCardless, explores these areas in the videos below, as well as recommending the next steps businesses should take.