A Comprehensive Guide To Learn About Strong Customer Authentication


Customer verification is an integral step in every organization. Strong customer authentication is a new condition under the Payment Services Directive to enhance the safety of payment channels and reduce possibilities of fraud.

Under this rule, electronic payments must use multi-factor authentication that authorizes the individuality of the cardholder. Let us learn more about the utility of strong customer authentication in businesses.

What is Strong Customer Authentication?

This type of authentication is based on three elements: knowledge, possession, and inherence.

  • Knowledge is what only the user is aware of like password,
  • possession is what only the user possesses like code received on the mobile phone, and
  • Inherence (that which the user has such as facial/ fingerprint biometric data).

All these three elements have to be independent of each other. This implies, if there is a breach in any of the elements, the reliability of the other elements will not get compromised. In this way, the confidentiality of the customer’s verification data will be maintained.

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Why SCA Is Made Mandatory By The Government?

The primary goal of SCA is to enhance and strengthen the safety of online transactions as well as lessen the chances of fraud. The reason why it came in force is due to increasing incidents of fraud in European nations.

From 2011 to 2016, European Central Bank recorded a rise of 66% frauds related to card-not-present. It is believed that the implementation of SCA will make it difficult for frauds to be committed.

What Nations Does SCA Apply To?

SCA is necessary when the payment services provider of the merchant and the card provider of the customer lie in the European Economic Area. If any of these entities lie outside the European Economic Area, then the payment services provider has to use its ‘best efforts’ for applying SCA.

When Did Strong Customer Authentication Get Implemented?

The original time limit for implementation of SCA was 14 September 2019. However, on 16 October 2019, the European Banking Authority increased the deadline to 31 December 2020.

In August 2019, the FCA confirmed that SCA implementation would get completed in eighteen months. The project is projected to end by March 2021. However, due to COVID-19, this time limit was increased to September 2021.

Who Are Liable For Ignoring SCA?

Banks and payment providers will have to pay fines for not implementing SCA/ comply with SCA requirements. Their licenses may also get revoked. It can even result in declined transactions, frustrated customers, and lost sales.

Does SCA apply to all-digital payment transactions?

No. It doesn’t apply to all payment transactions but specific ones. There are several exemptions to it.


Payment services providers and banks use a verification process to validate the identity of a customer. This authentication ensures that the person who either requests access to the account, or tries to make a payment, is either you or a person to who you have permitted to access your account. SCA is a good initiative to protect the confidentiality of the account and prevent any form of breaches.

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