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Barclaycard: So Far, So Good for Strong Customer Authentication

Barclaycard has reported no negative impact from introducing Strong Customer Authentication (SCA) last weekend. 

The new user authentication rules mandated by the European Union's revised Payment Services Directive (PSD2) were introduced by the UK's leading acquirer on Saturday, September 14. 

Barclaycard analyzed transaction data from September 14 and 15 to check what effect the new two-step authentication rules were having. The company found that merchants had not experienced an increase in abandoned transactions, nor had they seen a spike in declined payments.  

"Our data offers encouraging news for merchants, whose transaction volumes have been, so far, unaffected by the go-live of SCA," said Paul Adams, director of acquiring at Barclaycard Payment Solutions.

SCA legislation officially came into force across Europe on September 14; however, the European Banking Authority (EBA) has given each member state the option to apply for extensions. 

One country that took them up on the offer was the UK, which secured an 18-month extension to the deadline. The UK's financial regulator, the Financial Conduct Authority (FCA), announced in August that the country's payments and e-commerce providers would have until March 14, 2021 to achieve full compliance. 

Action will not be taken by the FCA before that date against firms that haven't implemented SCA, provided that "there is evidence that they have taken the necessary steps to comply with the plan." However, the FCA is expecting third-party providers to implement SCA for online banking by March 14, 2020.

The new SCA legislation requires that all European Economic Area (EEA) transactions go through a two-factor authentication process, unless they qualify for an exemption. Transactions that are exempt include contactless payments below €50/£30; payments made at unattended terminals, such as parking lot payment machines; and recurring payments of the same value to the same merchant, such as subscription payments.

Customers can also skip two-factor authentication for payments made to trusted merchants by whitelisting that merchant with their issuer. 

To help merchants prepare for the changes required by SCA, Barclaycard, which handles nearly half of the nation’s credit and debit card transactions, has launched Barclaycard Transact, which went live over the weekend.

The fraud protection solution allows businesses to benefit from SCA exemptions while making sure that all high-risk transactions still go through two-factor authentication, in accordance with the regulation.

Adams said: "We have designed Transact to help our customers get the most out of the incoming regulation, by enabling them to provide a smooth payment experience for their shoppers, while at the same time reducing risk and managing fraud."

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