# FCA softens its stance on regulations to help UK retailers through Covid-19
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-05-05
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: PSD2 Strong Customer Authentication Deadline Extended by 6 Months
Meta Description: Discover how the Financial Conduct Authority has extended the SCA compliance deadline to 14 September 2021 amidst Covid-19 challenges. Stay updated for
URL: https://financedigest.com/fca-softens-its-stance-on-regulations-to-help-uk-retailers-through-covid-19html

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/dsc7486-564-1736838920388-compressed.jpg)

_By **Ralf Gladis,** CEO,_ [_Computop_](http://www.computop.com)

In the middle of the Covid-19 crisis, when retailers are counting the immense, and in many cases disastrous, impact on sales, it’s likely that the last thing they will want to consider is regulations. It seems a lifetime ago that the issue of Strong Customer Authentication (SCA), the standard developed under the new Payment Services Directive (PSD2) to enhance the security of credit and debit card payments, was high on the agenda, with deadlines looming, and retailers under pressure to comply.

So, it will be a relief to those merchants who are looking forward to a time when they can start trading again in earnest, to know that the Financial Conduct Authority has [extended](https://www.fca.org.uk/firms/strong-customer-authentication) the deadline date for compliance by six months. Instead of 14 March 2021, they will now need to be ready by 14 September 2021 to minimise potential disruption to both consumers and merchants.

Whether this extension is realistic remains to be seen. Even before the Covid-19 [crisis hit](https://www.financedigest.com/analysis-forget-showering-its-eat-or-heat-for-shocked-europeans-hit-by-energy-crisis.html "Analysis-Forget showering, it’s eat or heat for shocked Europeans hit by energy crisis"), many retailers were struggling with the phased implementation plan. However, it is important to understand that the [advantages of SCA far outweigh any administrative](https://www.financedigest.com/improved-patient-safety-efficient-dose-administration-and-seamless-interoperability-for-advanced-infusion-delivery-are-several-advantages.html "Improved patient safety, efficient dose administration, and seamless interoperability for advanced infusion delivery are several advantages") headaches that might be encountered in preparing for it.

The main responsibility for SCA lies with payment schemes like Visa, MasterCard and PayPal. [Retailers need](https://www.financedigest.com/why-online-retail-trading-needs-an-overhaul.html "Why online retail trading needs an overhaul") to make sure that the checkout system that they use has access to the latest API for all these payment methods. To facilitate [credit card](https://www.financedigest.com/what-happens-to-credit-card-debt-when-you-die.html "What happens to credit card debt when you die") payments merchants will need to have implemented 3-D Secure 2.0 (3DS 2.0), the software that gives them the option to accept ‘frictionless flow’, allowing payment to be authorised without additional security measures and reducing any congestion at the point of checkout.

Upgrading the credit [card interface will also involve transmitting more data points with each payment](https://www.financedigest.com/fingerprints-supports-two-more-biometric-payment-card-launches-in-the-mena-region.html "FINGERPRINTS’ SUPPORTS TWO MORE BIOMETRIC PAYMENT CARD LAUNCHES IN THE MENA REGION"), including postal addresses, basket and customer data, IP-addresses, etc. This [information will be used by banks to run transactional risk analysis](https://www.financedigest.com/golf-apparel-market-key-players-and-production-information-analysis-with-forecast-2031.html "Golf Apparel Market: Key Players and Production Information Analysis with Forecast 2031"). The benefit to both the retailer and the [customer is that it is designed to speed up conversion, making the transaction faster and more friction-free, both of which enhance the customer experience](https://www.financedigest.com/improving-customer-experience-and-profits-with-embedded-payments.html "Improving customer experience and profits with embedded payments").

[**Contactless Payments**](https://www.financedigest.com/contactless-payments-spirit-willing-but-is-the-market.html "Contactless Payments: Spirit Willing but is the Market?")

Another example of Covid-19-related [leniency from the Financial Conduct Authority](https://www.financedigest.com/german-tax-authorities-should-show-leniency-to-households-firms-amid-energy-crisis-letter.html "German tax authorities should show leniency to households, firms amid energy crisis – letter") (FCA) is around contactless payments. As a result of the [virus outbreak](https://www.financedigest.com/future-market-insightss-detailed-report-on-cat-litter-market-offers-projections-of-potential-impact-of-corona-virus-outbreak.html "Future Market Insights’s Detailed Report on Cat Litter Market Offers Projections of Potential Impact of Corona Virus Outbreak") there has been a steep rise in this form of payment, which allows merchants and customers to minimise their contact with cash. In the UK, where, according to UK Finance, almost 50 per cent of payments are made contactlessly, [demand has reached](https://www.financedigest.com/demand-for-temperature-controlled-pharma-packaging-solutions-to-reach-over-us-9-bn-by-2030-fmi-projects-a-decline-till-q2-2020-amid-covid-19-pandemic.html "Demand for Temperature Controlled Pharma Packaging Solutions to Reach over US$ 9 Bn by 2030; FMI Projects a Decline till Q2 2020 Amid COVID-19 Pandemic") such a point that the spending limit for contactless payments was increased in April from £30 to £45.

Under normal circumstances, repeated purchases at upper-limits or where the [total value](https://www.financedigest.com/global-grass-fed-beef-market-value-is-forecast-to-total-us-17-9-bn-by-2031.html "Global Grass Fed Beef Market value is forecast to total US$ 17.9 Bn by 2031") of transactions exceeds 150 Euros or five contactless transactions in succession, are likely to result in SCA checks on the identity of the card holder. This is to ensure that PSPs or [banks know](https://www.financedigest.com/baas-what-you-need-to-know-about-the-rise-of-banking-as-a-service.html "BaaS: What you need to know about the rise of Banking as a Service") that the person making the payment is authorised to do so. But in April the FCA issued updated guidance indicating that it was taking a less stringent approach, [saying](https://www.fca.org.uk/firms/strong-customer-authentication): ‘We support the use of contactless payments and welcome the industry’s initiative to increase the contactless limit. To further facilitate this, we confirm that, in the current circumstances, we are very unlikely to take enforcement action if a firm does not apply strong [customer authentication when the cumulative amount of transaction values has exceeded](https://www.financedigest.com/banking-from-anywhere-embracing-technology-to-exceed-customer-expectations.html "Banking from anywhere: embracing technology to exceed customer expectations") EUR 150 or five contactless transactions in a row.  But this is only as long as the firm sufficiently mitigates the risk of unauthorised transactions and fraud, by having the necessary fraud [monitoring tools and systems](https://www.financedigest.com/vehicle-speed-monitoring-system-market-key-players-swot-analysis-key-indicators-and-forecast-to-2026.html "Vehicle Speed Monitoring System Market Key Players, SWOT Analysis, Key Indicators and Forecast to 2026") in place and taking swift action where appropriate.’

**EU Withdrawal**

The other issue that has been knocked off the news agenda due to the unprecedented [impact of Covid-19](https://www.financedigest.com/predisposition-biomarkers-market-future-trends-segmentation-strategies-to-boost-growth-applications-with-covid-19-impact-till-2028.html "Predisposition Biomarkers Market Future Trends, Segmentation, Strategies to Boost Growth, Applications with Covid-19 Impact till 2028") has been Brexit. Since the Withdrawal Agreement was ratified on the 31 January, we have been in an implementation period which will last until the 30th December this year. Currently EU law continues to apply, including [regulations in relation to payment](https://www.financedigest.com/the-future-of-payments-flexibility-regulation-and-bespoke-models.html "The Future of Payments: Flexibility, Regulation, and Bespoke Models"). However, work will [need to be done by the Payment Systems Regulator](https://www.financedigest.com/regulators-need-to-strike-the-balance-between-protection-and-strangulation.html "REGULATORS NEED TO STRIKE THE BALANCE BETWEEN PROTECTION AND STRANGULATION"), the FCA, Her Majesty’s Treasury, the Bank of England and other UK regulators to ensure systems and laws are in place once we reach the end of this period. In addition, those parties will need to agree the best way to [move forward](https://www.financedigest.com/life-is-moving-forward-china-declares-new-covid-phase.html "‘Life is moving forward’: China declares new COVID phase") with the national authorities in member states and all European policymakers on the shared issues and priorities. With no decisions made at the moment, and attention diverted to other urgent challenges, retailers, customers, PSPs and [banks are in a waiting pattern when it comes to the implications of Brexit on payment processes and regulations](https://www.financedigest.com/swiss-national-bank-seeks-banking-regulation-review-after-credit-suisse-crash.html "Swiss National Bank seeks banking regulation review after Credit Suisse crash").

Right now, the focus is on survival. The [next step](https://www.financedigest.com/eu-leaders-to-discuss-next-steps-on-energy-ukraine.html "EU leaders to discuss next steps on energy, Ukraine"), hopefully for many, is to build a recovery plan. But as part of this, it would be prudent to look at what the legislation requires currently, assess how SCA-viable payment processes at the checkout can be [integrated](https://www.financedigest.com/building-a-business-case-for-integrated-payments.html "Building a Business Case for Integrated Payments") and speak to payment service providers to ask for help and guidance. The alternative is to do nothing, which will result in being unprepared, and having to request that card-holding [customers authenticate themselves twice](https://www.financedigest.com/more-than-twice-as-many-consumers-trust-customer-reviews-over-companies-themselves-according-to-research-from-smart-money-people.html "More than twice as many consumers trust customer reviews over companies themselves according to research from Smart Money People"). As any retailer knows, any delay to the checkout process is unwelcome, and after Covid-19, the more friction-free the purchasing journey, the better.


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---