The introduction of 'strong customer authentication' (SCA) - also known as 'two factor authentication' or 'multi-factor authentication' for remote and electronic payment transactions has had a checkered history. Payment service providers should have been challenging customers to provide extra authentication details from 14 September 2019. But lack of industry preparation led the FCA (in line with the European Banking Authority and other EU national regulators) to state that it will not enforce the requirement until 14 March 2021, so long as PSPs are following an agreed industry plan to introduce the checks. In light of the COVID19 crisis, the FCA has now added:
"...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 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 in place and taking swift action where appropriate."
Meanwhile, the date for applying regulatory standards to secure communications amongst PSPs was also deferred from 19 September 2019 to 14 March 2020, yet some PSPs have not complied. The FCA is also letting them off the hook, where they are "facing further delays due to coronavirus:
"...we will consider on a case-by-case basis the appropriate further measures. In doing so, we will in particular consider:
- firms’ security around authentication to access their online banking and when making payments;
- their controls and processes to reduce fraud;
- whether that impact is likely to be exacerbated given the current circumstances."