Understanding The Norms Related To PSD2 SCA Rules With Various Payment Modules Included

By Sarala Vanga On Jan 16, 2021

This might be the first time when you are looking at the term SCA Optimization and don’t know what to think about it. In Layman’s term, it is targeted to be a real-time PSD2 decision engine. The main goal over here is to facilitate that stronger customer authentication or SCA for ensuring regulatory compliance. It will also help you to take the advantage of the SCA exemptions for delivering positive checking out experience.

A customized option to hold:

This SCA optimization is one completely customized engine and provides real-time machine learning and reporting capabilities. It will adapt way quickly to emerge fraud trends. The main goal is to keep the business protected for a longer span of time. The reliable centers are able to provide that scene based or agnostic 3DS authentication solution. It will need that single certification for supporting some of the major credit cards.

The benefits you can hold:

With the help of this psd2 sca rules machine, you can enjoy locality. It means, you get the chance to identify cards, which are primarily issued right outside EEA. Then you can also focus on MIT, which are out of SCA’s scope.

Remote payments form another interesting value associated with this engine. Here, you can address telephone and mail order and even work out on transactions, which are otherwise out of scope.
Then you have proper Transaction Risk Analysis. It means you get to maximize the TRA exemptions by just assessing some of the individual transactions right against multiple acquirers.

The requirements to unfold:

Before you proceed further for the SCA or Strong Customer Authentication, there are some much needed requirements to access over here. The major ones are kindly listed below for your reference.

Article 4(30):

It talks about the stronger customer authentication on its own. It more or less works like a multi-factor authentication. This is solely based on use or more elements uses, which are categorized as knowledge, inherence and possession, which will remain independent. Here, the breach of one is not going to compromise the current reliability of others. This section is primarily designed to protect confidential note of authenticated data well.

Article 97(1):

Also known as the directive, this requirement is much needed by the payment service providers for using stronger customer authentication. Here the payer must access it’s all payment accounts online. The payer also has to initiate one electronic based payment transaction and must carry out any action through one remote channel. It might imply that risk of payment fraud or any possible abuse.

When is the need to work on Strong Customer Authentication?

Strong Customer Authentication is primarily applied to the “customer-initiated” online payments, right within Europe. Therefore, most of the card payments and all the noted bank transfers will need SCA.

The recurring direct debits on other hand will be considered as “merchant initiated” and will not need any form of strong authentication.
However, with one exception of the current contactless payments, some of the in-person card payments will not be impacted by any of the new regulation.
For some of the online card payments, such authentication needs are applied to transactions. Here, the business and even the bank of the cardholder are situated in EEA.

Ways to authenticate one payment:

There are various ways to authenticate payment but the most common one is an online card payment. It solely relies on the 3D secure, which is one authenticated standard, widely supported by the majority of the European cards out there.

Applying this form of 3D secure will add that extra step after checkout. Here, the cardholder will be prompted right by the bank to offer added information for completing one payment.
A one-time code will be sent to fingerprint authentication or phone through their chosen mobile banking app.
Then you have the new version, which is the 3D Secure 2, of the authentication protocol, which rolled out in 2019. It has been targeted to be the main authenticating method for online card payments. It will also match with the new SCA needs.
This current new version is likely to provide a well thought out experience. The main goal is to actually minimize some frictions, which authentications will add right into the current checkout flow.

Some of the other most promising card based payments right here are Google Pay and Apple Pay. These sections will already have that support payment flow, along with built-in authentication layer. It is one major way for the businesses to offer you with frictionless based payment experience while matching with new needs and requirements.

You can even try to expect some of the common forms of European payment methods like Multibanco, Bancontact and iDEAL for following all the latest SCA rules without any major changes to the current user experience.