PSD2 Strong Customer Authentication isone the technologies that a lot of organizations are embracing these days. This technology provides an extra layer of security for customers as well as payment service providers alike. The fact that PSD2 simplified payments systems are made along electronic channels has t opened up banking platforms into a single market. SCA forces banks to uphold a standard of security by verifying users before any payments are authorized in an effort to combat the potential fraud found with online services.
Strong Customer Authentication requires that all banks or financial services collect at least two out of three verification factors, namely possession, knowledge and inherence. Possession has to do with a unique item that only the user has or owns, such as a phone, hardware token, smartcard or smart watch. Knowledge relates to something that the customer knows, or knowledge only they are privy to, such as passwords, security questions, pin numbers or passphrases. Inherence has to do with something that the customer is and uniquely identifies their physical state, such as a finger scan, facial recognition, voice recognition, DNA or iris format.
Under PSD2 Strong Customer Authentication regulations, these authentication conditions must integrate within your checkout flow before you can accept or conduct payment transactions for your customers. In case a user doesn’t meet the criteria, your service or bank must decline all initiated payment requests. An important thing to note is that the two factors you select as authenticators must be from different categories in case of a breach, for instance if a phone is stolen.
With such strict verification methods in place, it can help keep customer data safeand secure while meeting all privacy guidelines expected from governing regulators. Even though SCA createsuser-end friction and adds additional complexity to online payment systems, the good news is that it presents a series of benefits for both the merchant and the customer.
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