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PSD2’s SCA arrives: Is it a triumph for consumer security?

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This Saturday, 14th March, will mark the Financial Conduct Authority’s (FCA) six-month delayed deadline for the implementation of PSD2 Strong Customer Authentication (SCA) for online banking.

This regulation is mandating two levels of authorisation when transacting online in a bid to reduce fraud.

More and more consumers value the convenience of online banking and payment platforms, which are now used by over two-thirds of British adults – with 48 percent using mobile banking. However, this has caused fraud to skyrocket. In 2019, one in five UK adults were impacted by online card fraud, calling for financial services institutions to seriously re-evaluate current identity verification methods.

James Stickland, Chief Executive Officer at authentication platform Veridium, highlights that the huge growth in digital services means a redefinition of ‘strong authentication’ is essential. This should focus on multi factor biometrics, including fingerprint or facial, mobile possession, combined with innovative behavioural and location intelligence.

Stickland comments: “This Saturday’s deadline is a long-awaited triumph for consumer security and combatting online fraud. Ever-rising fraud levels are linked to the consumer preference of mobile e-commerce, forcing regulation to keep pace with innovation. Businesses have had an extended period of six months, in addition to the two years since the initial announcement, and there is no legitimate reason not to be compliant. A failure to integrate Strong Customer Authentication demonstrates a disregard for consumer protection – it should have been prioritised long ago and viewed as a business differentiator.”

He continues: “Whilst it is true that consumers will see minor changes to their day-to-day user experience, indeed it may even be improved, the additional layer of security on payments will enable consumers to benefit from safer and more innovative electronic payment services. Strong Customer Authentication will mean consumers are more confident when making payments – not serve as an inhibitor, as some have incorrectly suggested.”

Stickland says: “This regulation means financial institutions are now under the added pressure of facing huge fines for failing to comply. Implementing the latest identity verification technologies can help companies to protect the abundance of sensitive customer data and, crucially, deliver a seamless user experience. In our increasingly digitalised world, and with the explosion in cybercrime, identity theft and fraud, online payments must look to set a standard that meets consumer expectations.”

He concludes: “If banks are to meet this weekend’s PSD2 deadline, they should be turning to technologies in the market which have the potential to alleviate the challenges posed by the regulation. Multi factor authentication solutions can facilitate financial services institutions to enhance consumer confidence and create a secure experience, whilst ensuring the customer has a frictionless user journey. Basing the digital authentication process on combining the customer’s own technology with an open biometric approach and true step-up intelligence, will allow financial institutions to meet the regulatory requirements before it’s too late.”

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