39.3 billion – that’s how many payments were made in the UK last year, according to UK Finance, and back in 2017 debit cards overtook cash as the most frequently used payment method. UK Finance predicts that UK payments will grow to an estimated 43.3 billion annually in the next 10 years which means it’s increasingly important to stay safe particularly when you’re transacting online. That’s why new legislation created to keep you, your identity, and your finances safe is coming out soon.
The overall legislation is called the European Payments Services Directive (PSD2) and Strong Customer Authentication (SCA) is one component of it, aimed at keeping online transactions safer. The deadline for changes to take place is 14 September and, across Barclays, we are supporting clients and customers alike to be ready and understand the impact on them. The UK’s Financial Conduct Authority recently stated that legislation itself is being delayed to allow for some exceptions, including stronger payment security standards, but the message is clear that the September deadline still stands.
So what’s it for?
There’s a global focus on reducing e-commerce fraud, which SCA will help with. New research from Compare the Market shows that more than £2 billion was stolen from UK adults last year, and online payments are the weakest link. SCA will change the way you prove who you are. Have you ever been within clicks of paying for something online, but forgotten the password for your account? We’ve all been there. SCA can eliminate that frustration by letting you prove your identity another way – ensuring that those new shoes are safely en route and that your business trip train tickets don’t get ditched in an abandoned basket. According to a study by the University of Oxford with MasterCard, almost a third of all online purchases are abandoned because of forgotten passwords. SCA will help to reduce the risk of losing out on your shopping.
Here’s how. Going forward, you’ll need to use two-factors for authentication from SCA selected from three different ways of proving your ID, either through:
- Something you know – like your PIN
- Something you own – like your mobile phone
- Something you are – this is something unique to you, like your fingerprint or other biometric data
Because only one method relies on something you need to remember, there’s a greater chance of completed transactions and fewer abandoned baskets – customers won’t need to remember their password or a combination of PINs, numbers, and secret questions.
Up until now, your bank or provider has generally authenticated your ID for you. This is all set to change as additional authentication steps for online servicing and payments will increase in frequency and eventually cover every transaction.
University of Oxford and MasterCard’s study found:
• 51% of passwords are re-used across different websites
• 80% of passwords can be cracked in less than three days
• 21% of users forget passwords after two weeks
• 25% of users forget at least one password every day
The report also says that many industry professionals believe biometrics will reduce friction, decrease abandoned shopping baskets and simplify the entire online shopping experience.
Not everyone online is who they claim to be, and with advanced card skimming and hacking techniques threatening your safety, SCA will bring further protection to online transactions. As well as making it easier to prove your identity, SCA will also make it harder for fraudsters to target your account. Sheldon Chuan, Director of Digital, Experience and Integrations, Barclaycard Commercial Payments, says: “We need to accept that fraud is a major concern, but SCA will make it easier to keep our customers safe. Ultimately, this change aims to enhance protection from online fraud, which has increased dramatically in the last 10 years as a result of the rise in e-commerce.”
New tech for new times
In the future, customers will find it easier to complete transactions thanks to cutting-edge tech, as Jasmine Wu, Strategy Manager, Barclaycard Payment Solutions, explains: “Finger-touch technologies are making taking a payment using a fingerprint as the form of ID seamless.” As well as finger-touch equipment and card readers, Barclaycard is offering customers a variety of ways to get their payments through faster and more securely.
SCA is heralded as the biggest change to the payments industry since chip and PIN and with the 14 September deadline approaching, it’s important that businesses understand the changes coming. To help explain further on what PSD2 regulation covers and what it means for businesses Barclaycard has provided more information here: www.barclaycard.co.uk/business/psd2