New rules to confirm identity for online purchases come into effect

New Strong Customer Authentication (SCA) requirements, a set of rules from the Financial Conduct Authority (FCA) that will change how one confirms identity when making online purchases, is taking effect from today.

Customers will now be asked to prove their identity when making a purchase, by confirming two of the following three ‘factors’:

• Something they are – like a fingerprint or facial ID
• Something they know – like a passcode or password
• Something they have – like a mobile phone

Retailers with an online presence need to ensure they fully support SCA by today (14 March) or risk customer purchases being declined.

Today’s deadline comes almost two and a half years after the SCA requirements were announced in September 2019. As increasing amounts of purchases are being made digitally, it is hoped SCA will help reduce fraud and better protect customers and their money when shopping online.

While SCA rules have applied to a small number of transactions for some time, the proportion of transactions for which SCA requirements apply has been steadily increasing since the start of this year as merchants and Payment Service Providers (PSPs) readied to meet the enforcement date, when all transactions must be SCA-compliant.

In practice, this could mean customers are asked to verify a purchase via text message, receiving a passcode which they are then prompted to enter on screen. Other confirmations could include answering an automated phone call to your landline or mobile, or through an app on your smartphone.

Some types of transactions are exempt from strong customer authentication, meaning customers may not always be asked to complete extra security steps. These may be purchases deemed ‘low-risk’ of fraudulent activity, such as when buying low-cost items, or repeated purchases such as subscriptions.

The British Retail Consortium (BRC) said retailers are ready for the change, having been preparing their systems for many months to process these extra security checks. Successful roll out of the new regulations will also require banks to be prepared for the changes.

“Retailers have been working hard to prepare for the Strong Customer Authentication requirements, ensuring online purchases are both as safe and easy as possible,” Tom Ironside, director of business & regulation at the BRC, said.

“The BRC and our members have worked with suppliers to ensure multiple fraud checks are performed behind the scenes and any additional friction is kept to a minimum. Customers should be reassured that buying online has never been safer.”

The deadline for SCA was originally March 2021 but the FCA agreed to a delay to 14 March 2022 due to Covid-19. The FCA has stated that there will be no further extensions to this deadline.