SCA Preparedness — A Fizzle In The Making?


Call it the fizzle that might be felt across Europe – and beyond.

Call it the corporate equivalent of deer in the headlights.

Billions of transactions. Millions of merchants. And perhaps more than $100 billion in lost sales.

That’s because Strong Customer Authentication (SCA) is on the way in September, but as has been seen with other sweeping changes mandated by regulators and impacting the very way payments are made, lots of folks are not paying attention.

So when the change happens — when consumers have to offer up two proofs of identity out of a trio — and merchants are not ready, the friction and declined transactions will be palpable.

As noted in this space this past week, SCA has goals that are laudable by any measure, as the SCA requirement seeks to reduce fraud and make online card-not-present (CNP) transactions more secure. That’s important in a world where commerce is increasingly moving online.

In terms of mechanics, SCA is part of PSD2 and requires 300 million European consumers to confirm their identities each time they purchase online, but they have to confirm they are who they say they are through two of the following: inputting personally identifiable information (PII), responding to calls or text alerts on mobile phones, responding to emails sent to submitted addresses or providing biometrics like fingerprints or facial recognition, among other options.

The move means that any number of stakeholders will have to update tech, but then again, as Guillaume Princen, head of continental Europe at payments processor Stripe (which is offering new products geared to smoothing the transition to SCA) said, “Merchants have been sleepwalking into SCA.” Princen explained, “There are big problems, [and] among them is actual awareness. Only very few merchants are actually aware of SCA.”

Card giant Mastercard has estimated that just 25 percent of those in Europe are actually fully aware of SCA. Larger merchants appear to be better prepared than the roughly 800,000 smaller ones operating across the continent. Per Mastercard’s analysis, awareness is twice as high among those with at least 500 transactions per month than for firms transacting below that threshold. That’s a lot of inattention, it seems, and where there’s lack of awareness there is lack of preparedness. Where there’s lack of preparedness what is left may be … panic. And lots of declined transactions, which leads to hordes of disgruntled consumers. The rude awakening for sleepwalkers may translate into a eCommerce fizzle, until merchants are fully woke.


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Qualcomm: Battle a tech giant, settle the skirmish, see stock surge. That’s the recipe for a Qualcomm one-day stock bump to the tune of 23 percent. Apple will once again be using Qualcomm modem chips and there’s also a six-year patent license in place.

P2P: Bank of America’s 1Q results show a bright spot in digital banking, as P2P services gain traction. Zelle volume doubled year on year, to 58 million transactions. The value of those transactions was up 81 percent to $16 billion. Zelle makes leaping strides like a gazelle, it seems.


Spotify: Amazon just launched a free ad-supported music service — which means, of course, that the (free) streaming music field is about to get a bit more crowded. The free service could be offered through the Echo speakers.

Facebook: Data as a weapon? NBC News reported that, per thousands of pages of leaked documents, the social media giant rewarded some companies with access to data while denying access to data for rival companies and applications.

Amazon’s Italy Issue: The company is facing an inquiry by the Italian Competition Authority (ICA) over allegations that it abused its position in Italian eCommerce and logistics markets. Regulators are looking into whether the company granted “enhanced visibility” on the website to third-party vendors using the Amazon logistics service. The ICA has stated that  Amazon could conceivably discriminate on the basis of whether or not the vendor uses Amazon’s logistics services.