Fintechs fear online retailers aren’t ready for stricter security checks

Strong Customer Authentication checks

Fintechs, banks and payment providers have expressed concern that UK merchants are unprepared for new online shopping security checks that come into force today.

The Strong Customer Authentication (SCA) rules, implemented to tackle online fraud, mean customers will be required to prove their identity when making an online purchase of £25 or more using a card.

At checkout customers will be asked to provide a form of identification – including fingerprints, facial ID and passcodes – to verify their identity.

The government announced the requirements in September 2019 in a bid to tackle soaring online fraud. In that time, retailers and payment providers have been working to implement these changes, with 14 March the deadline for retailers.

UK banks and fintechs, such as Starling Bank and GoCardless, have warned that not all merchants in the UK will be technologically prepared for the change, resulting in purchases being declined.

‘Paying by card is about to get more painful’

A spokesperson for Starling said some retailers “might not yet be ready if you’re making an online purchase that needs extra security checks”.

GoCardless director of product marketing, Siamac Rezaiezadeh, told UKTN: “Paying by card is about to get a lot more painful thanks to the implementation of the new Strong Customer Authentication (SCA) rules.”

Rezaiezadeh claims the new requirements are “yet another example of the card industry adding inconvenient bolt-ons to compensate for the fact that cards were not designed for an online world”.

Some three in ten British consumers said they have given up on an online purchase because security checks took too long, according to Barclays data.

“Today we see the biggest change to consumer payments since Chip and PIN was rolled out more than 16 years ago,” said Rob Cameron, chief executive of Barclaycard Payments. “However, for the new rules to be fully effective, it’s important shoppers understand what they will be asked to do at the checkout, and why.”

The Barclays research found that 56% of UK consumers have already used SCA verification while shopping online. Digital banks, such as Monzo, and high street have been using this form of security check for a number of years on certain purchases.

Tom Ironside, the director of business and regulation at the British Retail Consortium, maintains that merchants have had enough time to prepare and that the new rules will keep customers safe.

The original deadline had been March 2021, but the Financial Conduct Authority (FCA) extended it by one year due to the Covid-19 pandemic.

Ironside said: “Retailers have been working hard to prepare for the Strong Customer Authentication requirements, ensuring online purchases are both as safe and easy as possible.”

He added that “customers should be reassured that buying online has never been safer”.

The security restrictions do not apply to all online purchases. Transactions deemed a low risk for fraud may be exempt from the additional checks. This includes low-cost purchases and repeated payments, including subscriptions.