Everything Your Business Needs to Know About SCA Compliance

Everything Your Business Needs to Know About SCA Compliance
SCA Compliance

Last Updated on March 22, 2024 by Nasir Hanif

Does your business rely on recurring payments? If so, you’ll want to make sure you’re fully aware of the changes currently taking place in the payments industry. On September 14, 2019, Strong Customer Authentication (SCA) requirements went into effect in the European Economic Area (EEA), impacting companies across the globe. The plan was for these requirements to be reinforced over an 18-month phase-in period, and fully enforced by December 2020.

What is SCA?

If you’re unfamiliar with what SCA is, here is a quick breakdown of what your business needs to know, and who is impacted by these new regulations. In short, the SCA is the new EEA regulatory directive that requires multi-factor authentication for online transactions to reduce fraud. In order for a transaction to be approved, customers must first authenticate it with at least two of the following elements: password, phone or fingerprint.

And who is impacted by this latest decision? The SCA is required on card transactions where both merchant’s bank and the issuing bank are located within the EEA. This includes the following countries: Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. 

Businesses Prepare for SCA

How effective will this regulation be? The answer is complicated. Really, only time will tell. 

William Kelly, director of Global Payments at Constant Contact, shared his thoughts, saying, “We do think the EU market is more open to two-factor authentication, but really have no way to assess it until we have some actual experience.”

“Once enacted, we will monitor our abandonment rate closely. If we see a significant increase due to authentication challenges, we will likely look at additional retention efforts such as contacting customers directly who have abandoned their cart,” he went on to say.

To make sure their business is prepared and up-to-speed, businesses will need to incorporate SCA as part of the checkout flow. In the meantime, enforcement measures have extended beyond the timeline to allow more time for banks and the payment industry as a whole to catch up.

Where to Find Reputable Payment Processing Providers

Are you looking for a reputable payment processor to ensure your business is compliant? Consider utilizing Pinwheel Payments. Pinwheel Pay can help you find an option that best fits your business’ unique needs. Find a provider that will help you create a seamless customer experience and ensure the safe transfer of sensitive information.

Read more: How do I Fix Netgear Authentication Error?