The long-awaited implementation of new Strong Customer Authentication (SCA) authorisation comes into effect today – marking the most significant change in UK e-commerce for some time.
It’s a regulation that has been described as ‘transforming’ the way in which payments are conducted in the UK.
Nonetheless, there have also been calls that the new guidelines don’t go far enough – with vulnerability to ‘simswapping’ being highlighted by Fergal Parkinson, Director of TMT Analysis.
The warnings of Parkinson underline the continued evolution of fraudsters within payments – highlighting the need for regulatory flexibility in the sector.
(Parkinson?) He stated: “Whilst any consumer protection measures are to be welcomed, this is merely the tip of the iceberg. The new rules don’t go far enough and still leave the door wide open for potential simswapping – an increasingly common technique adopted by fraudsters where they intercept authentication text messages.
“Retailers should not be relying just on basic two-factor authentication – sending passwords to a device in order to log in – to keep customer details secure. Ensuring that devices are linked to a specific person is a much more secure approach which dramatically reduces risk to both customers and retailers.
“Crucially, this needs to be done at account creation or registration not just at point of sale to avoid the tricky position PayPal recently found itself in, where 4.5m fake accounts needed to be weeded out after they’ve already committed fraud, rather than focusing on preventing it from occurring in the first place.”
The authorisation marks a significant moment for UK payments and retailers, with new data from Barclaycard Payments, highlighting that as of February 2022 as SCA began rolling out, over 1.2m online transactions worth over £100m were declined, as online businesses were not able to route transactions through an SCA compliant channel.
The data detailed that last month, 14 percent of shoppers noticed an increase in their online payments being declined. Additionally, 37 per cent headed to another retailer to complete their purchase, while the same proportion said they’re unlikely to shop with a merchant in future if their payment gets rejected without explanation.