SCA Readiness Fizzles In Face Of September Deadline

alarm clock for SCA

To steal a line from Earth, Wind & Fire, it’s likely to be a September to remember. For merchants large and small, might this fall, and beyond, be chilly in terms of top line growth?

Certainly so, if a significant number of transactions are denied in the wake of the Strong Customer Authentication (SCA) debut in September. As has been recounted in this space, the European Union’s SCA regulation looks to have hundreds of millions of consumers confirm they are who they say they are when they buy goods and services online.

They have to provide personally identifiable information, must respond to communications over the mobile devices they wield, or provide evidence of their identities through biometrics like facial or fingerprint scans.

SCA, which is part of PSD2, is mandated to be built into checkout flows for online merchants, but there’s a startling lack of readiness on the part of those same merchants. As Mastercard has found in a recent study, only 25 percent of online merchants were aware of SCA requirements, and of that tally 24 percent said they have no plans to support the requirements by the deadline.

Spencer McLain, vice president, EMEA at Whitepages Pro, told PYMNTS that these merchants will start seeing declines on European-based transactions if they are not exempt by falling under certain thresholds, or if they do not apply 3D-Secure authentication methods to verify card-not-present transactions.

It’s tough to put a number on it, but one estimate, courtesy of payments firm Stripe and carried out by Fahrenheit 451, found that European businesses could lose as much as $57 billion in economic activity in the year after SCA debuts. In terms of readiness, that study found that only 40 percent of businesses aware of SCA felt prepared to meet its requirements.

Perhaps, when the transactions start cascading into a waterfall of declines, SCA could represent a new acronym for merchants: “Suddenly Caught our Attention.”


Chewy valuation: Pets are big business, with a mastiff-sized initial public offering (IPO) looming. PetSmart aims to take its online venture public at a valuation of around $7 billion. Roughly two thirds of the site’s net sales (the total top line was $3.5 billion in 2018) come from a recurring subscription model.

FinTech across the pond: Card giants are stepping up their support for FinTech, especially in Europe. Mastercard has announced a new generation of its Accelerate program, which helps FinTechs broaden geographic reach. Visa has launched b.yond, which helps FinTechs bring new payments capabilities to clients.

Contactless payments: In Singapore, Visa and the Singapore Land Transportation Authority roll out a boost to contactless acceptance over mass transit — to the tune of 30,000 acceptance points. 


Finn: JPMorgan shutters its project aimed at bringing more millennials to digital banking. Finn is finis, it seems, as the no-fee banking product has been scrapped. Now the bank is transferring those users’ funds to other Chase accounts.

Banking blind spot: Barclays warns that banks in China, with a combined $647 billion in USD equivalent assets may be at risk of seeing government takeovers, intervention, or outright failure. At issue are loans that are turning out to have been risky or may have soured. The report comes after the first government takeover of a Chinese bank in several years, of Baoshang Bank.

Retail stocks: May was a gloomy month for the XRT, a fund that tracks retail stocks, as it was down 13 percent. One Miller Tabak Managing Director Matt Maley warns that consumer confidence may go down if the stock market continues to trend lower, which would “cause problems” for retail stocks.