Bank Regulation

Report: Some UK Merchants Remain Reluctant To Embrace SCA

Most markets including the European Union, the United Kingdom and the United States have seen a jump in online transaction volume as consumers react to the pandemic.

One recent study found that almost 50 percent of shoppers worldwide are using digital payment methods more often than they did prior to the pandemic, for example.

This represents both an opportunity and a challenge for merchants — not to mention their banks and financial regulators — as these entities attempt to navigate this expanding online volume while staying compliant with their markets’ payment and data privacy rules. Fraud is also on the rise as another study found that one out of three U.K. consumers has been targeted with COVID-19-related fraud schemes, for example. This is putting new pressure on regulators to make sure the rules they do have in place, including the General Data Protection Regulation (GDPR) and the revised Payment Services Directive (PSD2), can adequately support merchants needing to accept transactions quickly, while also keeping them secure.

In the latest Merchants Guide To Navigating Global Payments Regulations, PYMNTS analyzes how the ongoing pandemic has affected the rise of fraud, as well as how regulators must respond to this rise when crafting open banking laws designed to keep both consumers, financial institutions (FIs) and merchants safe.

Around The Data Protection World

Both E.U. and U.K. regulators have already pushed back the deadline for compliance with Strong Customer Authentication (SCA) as the pandemic introduced new challenges for merchants, and many businesses are still wondering how and what they need to change in their payments experience to become compliant. U.K. trade association UK Finance has therefore recently published a guideline for these merchants that will help them to address their pain points, recommending that companies follow a simple three-step process to achieve SCA compliance. The purpose of the outline is to help ease the SCA transition for merchants, thus reducing any friction points for businesses that may still be overwhelmed with the impact of the ongoing pandemic.

The continuing global health crisis is prompting expanding conversations over user privacy in other markets, notably in the state of California where merchants are still attempting to grow used to the effects of the California Consumer Privacy Act (CCPA) since it went into effect on Jan. 1. State lawmakers are now debating the ratification of other laws that would add new privacy and security standards on top of this rule, setting a vote for the implementation of the California Privacy Rights and Enforcement Act of 2020 (CPRA) on Nov 3. This act would mimic some aspects of the E.U.’s GDPR in that it would give California users the right to correction, among others, meaning consumers could ask companies to correct existing data. This would expand the security and privacy protections active in California, something that could potentially ripple out to the rest of the U.S.

Australia is yet another market seeing widespread shifts to the way it treats consumer privacy during the pandemic. The country’s own Consumer Data Right (CDR) officially came into effect on July 1, and has quite a few similarities to California’s CCPA in that it determines the standards for how Australian companies can collect and use consumers’ data. The first phase of the CDR applies to Australia’s top four banks, and there are plans to expand its reach later in the year. This means that consumers must opt-in to allow these four banks to collect and store their personal information.

For more on these and other stories, visit the Tracker’s News & Trends.

Why Pandemic-Related Online Shopping Shifts Are Leading To SCA Compliance Questions

Consumers are shopping online now more than ever, both to make routine purchases for weekly groceries and for purchases like books, wine or entertainment. Merchants must finalize each of these purchases quickly to stay on top of the expanding volume, but they must also be sure that each of these transactions is legitimate.

This has led to many merchants in markets such as the U.K. to examine how upcoming rules governing online transactions — such as SCA — will truly affect them, explained Richard Ellison, founder of boutique wine merchant Wanderlust Wine, in a recent interview with PYMNTS.

To learn more about how the pandemic is provoking lingering SCA questions among merchants, visit the Tracker’s Feature Story.

Deep Dive: Why Open Banking Regulations Need To Protect Online Merchants From Rising Fraud

Fraudsters followed the wave of global consumers moving to online channels to make their daily purchases, looking to take advantage of this new volume to score personal information from overwhelmed servers. Merchants are therefore fending off both a higher volume of fraudsters while also trying to manage the inflated cost to do so, creating strain on businesses already economically stressed due to the effects of the ongoing pandemic. The regulators and financial authorities in such markets looking to accelerate plans for open banking initiatives must therefore carefully consider how their upgraded rules could ward against new and expanding fraud.

To learn more about why open banking regulations must be shifted to keep out rising fraud levels, visit the Tracker’s Deep Dive.

About The Tracker
The Merchants Guide To Navigating Global Payments Regulations, powered by Ekata, is the go-to monthly resource for updates on the trends and changes regarding PSD2 as well as other privacy and data protection regulations.

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