On 16 October 2019, The European Banking Authority (EBA) published an Opinion on the deadline for the migration to strong customer authentication (SCA) for e-commerce card-based payment transactions.
The Opinion address concerns about the deadline to comply with SCA raised with the opinion of 21 June 2019 with which the EBA was allowing National Competent Authorities (NCA) to provide limited additional time to PSPs (issuers and acquirers) to comply with SCA.
The EBA opinion of 16 October 2019 allow PSPs to complete their migration plans to SCA – including implementation and testing by merchants – by 31 December 2020.
The opinion of 16 October addresses online card-based payment transactions only (i.e. card-not-present payment transactions). This sounds inconsistent as regulations, official guidelines and competent authorities’ opinions should equally apply to ALL payment methods and be technologically neutral.
This may add uncertainty to an ecosystem that has been suffering from a number of uncertainties in the recent past and looks forward to clear rules and guidelines on actions and timing. In fact, the industry may be confused on the right approach toward non card-based payment methods. In principle some PSPs could agree with NCAs (National Competent Authorities) on implementing SCA with different timings, and this may also vary among member state. If a similar scenario will materialize customers could experience different authentication rules with different players in different EU countries at anyone time.
This is inconsistent with the desire of most PSPs consistent and harmonized implementation of SCA with a single common deadline across the EU to avoid negative impacts on cross-border payments, the decline of legitimate payment transactions, customer drop-out, level-playing field issues across jurisdictions, regulatory arbitrage among member states and further complexity. Also, we are surprised as this is also a result of a survey conducted last summer across PSPs and mentioned in the EBA Opinion of 16 October 2019. To be precise the opinion states that the PSPs preference relates to card-based payment transactions, but we strongly believe that the industry intended to extend their preferences to all payments methods.