City watchdog delays implementation of new online payment rules

The implementation of ’strong customer authentication’ (SCA), which require two-factor identification for online purchases, will come into effect from September 14.

However, today the Financial Conduct Authority (FCA) said businesses will be granted a grace period until March 2021 to implement the feature, which has been introduced in a bid to crack down on online fraud.

The delay came after industry groups warned that card issuers, payment firms and online retailers would not have time to implement the changes and that customers could be impacted as a result.

BRC payments policy adviser Andrew Cregan said: “The decision by the FCA avoids a payments cliff-edge, whereby 25-30% of ecommerce transactions made online after September 14 would have been at risk of failing as a result of the new laws. The 18-month, phased implementation of SCA should allow retailers and banks time to put in place the necessary technical fixes required and minimise any disruption in online transactions.

“The BRC supports the implementation of SCA, which will strengthen the protections that customers have in their digital purchases. We are working closely with our members on this issue, however, it is vital that the FCA keeps up the pressure on banks and payment service providers to deliver solutions in time to avoid another cliff-edge in 18 months for retailers and other businesses on the front line.”

The FCA said it would not take action against firms that have no rolled out SCA in the intervening period between September 2019 and March 2021 provided they have plans in place to comply with the regulations by the extended deadline.

Managing director of personal finance at UK Finance Eric Leenders said: “Today’s FCA plan, which supports our proposals for a managed rollout, will help the industry ensure a timely migration to SCA and result in the best outcomes for consumers while effectively balancing both convenience and security.”