Why is SCA being implemented?

The reasons behind and key goals of SCA.


Why is SCA coming into force?

SCA is part of PSD2. One of the aims of PSD2 is to provide protection for consumers.

Since the implementation of the original PSD, there have been new technological advances within the payments market seeing an increase of Third Party Providers (TPPs). These TPPs offer new and innovative ways of accessing consumers’ account information and initiating payments.

However, opening up access to consumer accounts in this way creates increased security risk, and the tradeoff is strict regulation on how TPPs and payment service providers get access to these accounts.

That’s where SCA comes in. It aims to ensure that the end customer is the rightful owner of the bank account or other payment mechanism (e.g. card). By going through a 2-factor authentication process, the risk of fraud is perceived to be reduced.

In short, SCA is aimed at improving the security of payers’ online transactions and reducing payer fraud.

The cost of payments fraud

SCA is designed to reduce fraud during online transactions, but how much impact will it make?

Europol estimated that card-not-present fraud accounted for 66% of €1.44 billion in fraudulent card transactions in 2013. By 2016, the European Central Bank (ECB) calculated the total cost of card payment fraud reached €1.8 billion. The UK, France and Denmark suffered from the highest rates of card fraud.

In the UK alone, £2billion was stolen from credit and debit cards in 2017, with 28% of people becoming the victim of online payment fraud.

Any reduction in the rate of fraud could result in a significant saving across Europe.

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