SCA postponed – The payments apocalypse has been delayed

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Following in the footsteps of Brexit, the payments apocalypse has been delayed.

The Financial Conduct Authority (FCA) announced on Tuesday that it would delay the enforcement of Strong Customer Authentication (SCA) for 18 months.

The FCA had taken its lead from the European Banking Authority (EBA), who in late June had said it would let national regulators “provide limited additional time” on a local basis. Earlier that month, the EBA had rejected call for a continent wide grace-period.

Do you remember when Theresa May said she wouldn’t delay Brexit, and then she said she wouldn’t delay Brexit, and then she said she wouldn’t delay Brexit and then April rolled around and Brexit had been delayed?

It’s a well-trodden path, the delay. It’s becoming a cultural trope.

The EBA and the FCA had clearly been paying close attention to the political sphere in late 2018 and early 2019. Watching on, wide eyed and intrigued, as the delay as a concept was rubbished again and again and again. And then it wasn’t.

A masterstroke.

It wasn’t until 28th June that the FCA announced it would be delaying implementing SCA rules in the UK. It took until 13th August to officially endorse a contingency plan. This is eleventh hour stuff. You could almost hear to splat of perspiration on the floor, as merchants across the spectrum wiped the sweat from their brows.

Conversion rates are safe. For 18 months.

The FCA had tasked the trade group UK Finance with drawing up a transition plan. UK Finance proposed a delay of 18 months to the enforcement of multi-factor authentication, giving merchant and financial institutions time to become technically capable.

However, not all of UK Finance’s key recommendations were accepted by the FCA. The trade body had proposed giving more time for the travel and hospitality industries to update their complex legacy payment systems. The agreed upon 18 month grace period can be seen as a compromise struck.

Britain’s financial authority is not the first to come out in favour of a delay. Leading financial compliance bodies in France, Italy and Denmark have all publically endorsed the idea of a delay. France is the only other country that has outlined a timetable for the delay.

Many have welcomed the FCA’s announcement as necessary in the face of major technical upheaval. Patrick Collison, CEO of Stripe, described SCA as “almost certainly the largest migration that European online retailers have ever had to do." Sounds biblical. An exodus of online retailers to a payment journey in keeping with the modern consumer. So that’s mobile friendly, and anti-sophisticated fraud.

The future is here. Well it will be in 18 months.


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