Pressure mounts on regulators over SCA plans

By Michael McCaw & Alex Hamilton

With little over a week before Europe’s strong customer authentication (SCA) is due to go-live market participants and industry bodies continue to call for clarity from national regulators and the European Banking Authority (EBA) around how the rules are to be implemented.

“We still have a few national regulators that have not really communicated to the industry what their plans are after September 14 – whether there’s going to be a transition period or managed rollouts,” says Elie Beyrouthy, chair of the European Payment Institutions Federation (EPIF). “The industry needs that clarity.”

The EPIF – together with EuoCommerce, Mastercard, the European Hotel Forum, Visa, Ecommerce Europe, the European Association of Payment Service Providers for Merchants and the European Banking Federation – sent a joint industry letter to Jose Manuel Campa, chair of the EBA on September 4 to request either that a pan-European approach to SCA be implemented, or that the European body put pressure on national regulators to provide clarity on their individual plans.

“EU harmonised rules is what we really seek and a consistent approach from the EBA is the preferred solution but being realistic the EBA might not be in a position to adopt something before September 14,” says Beyrouthy.

“We’re asking for the 18-month transition period just to have consistency across all 28 EU jurisdictions,” he says.

As it stands, a number of national regulators have announced phased implementations, while it’s understood a significant number – including Lithuania, Estonia, Croatia, Romania, Bulgaria, Hungary, Finland, Latvia, Austria, Slovakia and Slovenia have not provided recent clarification.

“The issue is that many merchants are not ready to apply SCA rules so the impact on EU ecommerce could be huge. At least a third of transactions could be declined according to some suggestions,” says Beyrouthy.

Charles Damen, senior vice president of payments strategy at FIS, says that while there is a high expectation that more countries will announce delays, there is no guarantee that all will. “This situation makes things more challenging for our international customers who operate in markets across the EEA. We would welcome a harmonised, EEA-wide approach to SCA enforcement delay timelines.”

Tony Hammond, senior vice president at FreedomPay supports the idea of a pan-European approach. “The varying country timelines are very likely to cause market difficulties. It is better to have one deadline which everyone should adhere to rather than having to manage different deadlines on a country by country basis,” he says.

For Damen, it has become clear over the past year that the industry overall was not ready for SCA and that implementing it fully would have been damaging. Despite this, he adds, the fact that a transition period has been granted should not mean that firms can rest on their laurels.

“It is vital there is no loss of momentum or progress amongst participants, and that merchants move forward with preparations for compliance and reduction of fraud – and that implementation timescales are short. If the delays to implementation of PSD2 and Strong Customer Authentication (SCA) are too long, it will be more difficult for the industry to achieve the collective goal of increasing consumer choice and reducing fraud.”


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