What is SCA?

SCA or Strong Customer Authentication is part of Europe-wide legislation that took effect on 14th September 2019. It’s designed to make card payments more secure and will impact all UK companies doing business in the EEA (European Economic Area) regardless of the outcome of Brexit. It works in much the same way as two-factor authentication and you may have already used variants of it if you’ve seen 3D Secure authentication when you’ve paid by card online.

How does it work?

When your customer pays their invoice (via Stripe) they will need to offer two further pieces of identifying information on top of their payment details.  This information can take any of the following forms:

  • Something only your customer knows, such as a password (which will have been created by them when they set up their bank account)
  • Something only your customer possesses, such as their mobile phone (which can receive a single-use code)
  • Something only your customer is, which could be something like a fingerprint

Whatever it is, it will be information that only your customer will know and it won’t be something that you (or we) will be able to provide them with. It will either be a piece of information that they specified when they set up their bank account or when they configured their banking app. This information will not be held by anyone and will only be used to verify the purchaser’s identity.

Where does Strong Customer Authentication apply?

SCA impacts any applicable transaction where both the business’ payment service provider and the end customer’s bank are located within the European Economic Area (EEA). If one of these is outside Europe, the requirement is for the payment service provider in Europe to use ‘best efforts’ to apply SCA.

Possible Implications

You may find that some clients have difficulty paying your invoices online while they become familiar with SCA and as a result, you may see an increase in payments by cash, BACS transfer or cheque. However, after the initial few weeks, we expect that normality will quickly resume and consumers become familiar with SCA and how to use it.