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Understanding Strong Customer Authentication

Author: Jeffrey van der Veer August 29, 2019 · 3 Min read
Understanding Strong Customer Authentication

On September 14, 2019, new requirements for online payments will be introduced in Europe as part of the second Payment Services Directive (PSD2). In this post, we’ll take a closer look at these new requirements, better known as Strong Customer Authentication (SCA) and what this means for you.

Note: If you’re using Booqable to accept payments, you’ll be compliant in time for the deadline automatically.

What is Strong Customer Authentication?

Strong Customer Authentication is a new requirement for authenticating online payments to reduce fraud and make online purchases more secure. Once SCA goes into effect, card payments will require two-factor authentication, which will result in a different user experience. Transactions that don’t follow these guidelines may be declined by your customers’ card issuer or bank. SCA will apply to transactions where both the business and the card issuer are located in the European Economic Area (EEA).

When authentication is required, online card payments will automatically rely on 3D Secure, an authentication standard supported by all major European cards. This technology adds an extra layer of security after checkout, where the customer authenticates by using two out of three elements listed below:

  • Something the customer knows (e.g., password or PIN)
  • Something the customer has (e.g., phone or hardware token)
  • Something the customer is (e.g., fingerprint or face recognition)

As an example, instead of just entering a password or PIN, the new requirement prompts your customer to enter a code generated by their banking app to complete payment.

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How SCA affects your online checkout flow

Now, let’s take this information and see what changes in the Booqable checkout flow. When the customer selects ‘card payment’ and enters card details to initiate the payment, your payment provider will check whether SCA is required. If so, the customer needs to authenticate during checkout using the methods listed earlier (depending on what their bank or card issuer supports).

How SCA affects manual credit card charges

When a customer is not actively in your checkout flow (when charging a saved card, for example), the customer may need to re-authenticate. We’ll be adding a customizable email template to send an authentication link when required. Booqable will also optimize saved cards for future transactions, decreasing the chance of needing to re-authenticate.

If you have any questions about Strong Customer Authentication and the way Booqable will handle this, please let us know.

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