From 14th September 2019 , a new authentication protocol known as Strong Customer Authentication (SCA) will be incorporated in Europe as a part of Second Payment Service Directive ( PSD2). Transactions which don’t follow the new authentication guidelines might be declined by your customer’s bank. Therefore, it’s necessary that you comply by this regulation for your business.
So, what is SCA ?
Strong Customer Authentication (SCA) is a new European regulatory requirement to reduce fraud and make online payments more secure. Once SCA comes into effect, you will need to build additional authentications into your checkout flow. This requires alteast 2 authentication elements to be fulfilled among the following three:
1. Something the customer knows ( i.e password, PIN etc)
2.Something the customer has ( i.e phone, ID prove, token)
3.Something the customer is ( i.e face or fingerprint recognition)
When is SCA required?
Strong Customer Authentication will apply to “customer-initiated” online payments within Europe. That means most card payments and all bank transfers will require SCA. For online card payments, these requirements will apply to transactions where both the business and the cardholder’s bank are located in the European Economic Area (EEA).
Does Stripe Supports SCA?
Yes, Stripe has added SCA support and have included an additional step for customer authentication. There might be a slight change in the checkout flow as claimed by them here, but the dynamic authentication process can be easily incorporated in your business to ensure SCA compliance. So, here’s a briefing of how your new Stripe checkout process will look like-
Step 1: Payment Initiation- Customer completes the checkout form and fills in the card details
Step 2: Authentication Process ( New)- Stripe detects whether authentication is needed. If required, Stripe uses 3D Secure 2 to authenticate the customer using a one-time password (OTP) or a biometric ID, depending on what the customer’s bank supports.
Step 3: Payment completion: After the customer’s identity is confirmed through 3D secure, the card is charged and the payment is completed.
What should you do if you are running your online business with WCFM Marketplace?
We have updated our plugin and added Stripe SCA compatibility. Therefore, our solution completely supports the authentication systems as per the guidelines provided. Having said so, you need not worry about the new protocol which will be in effect from 14th of this month. Happy Selling!