UK shoppers will now face more security checks when shopping online under new customer protection rules.
Starting today (March 14, 2022), e-commerce shoppers will face mandatory multi-factor authentication in an effort to reduce online fraud and crime, ensuring consumers don't get scammed.
The changes, which will also apply to face-to-face purchases, will make shopping a bit longer and a bit more tedious, but not to worry: here's everything you need to know.
What changed?
New Strong Customer Authentication (SCA) requirements now mean you'll go through an extra step when buying, effectively designed to make sure you're who you say you are.
They have actually been in place since March 2020, but will now be mandatory and all retailers will need to ensure they have the systems in place.
After you add your payment information, and in some cases possibly after clicking a Buy or Buy button, you will be asked to provide additional information to confirm your identity.
This can be a biometric scan of your fingerprint, information such as a full or partial password or passphrase, or an alert on a separate device, such as an SMS sent to your phone or an automated phone call. If you are unable to do so, the transaction will be declined.
Many users are already familiar with these steps, which have been common in online banking and finance applications for some time, but systems will now be much more common than ever.
In-person purchases will still rely heavily on chip and pin security protection, which is covered by SCA, so no big changes there.
SCA is part of the second Payment Services Directive (PSD2), which aims to add additional layers of security to electronic and online payments. PSD2 applies to the European Economic Area (EEA) which covers most of the EU as well as the UK.
Why does it change?
Unfortunately, cybercrime is a growing concern for consumers and businesses, and revenues are rising during the pandemic.
Industry body UK Finance found that €1.600bn of fraud was stopped in 2020, but the pandemic meant the 2021 figure could be even higher as more consumers turn to online shopping.
UK Finance found that wire transfer scam losses rose 71% to £355m in the first half of 2021, the equivalent of nearly £2m a day. Identity theft scams also increased 123% in the first six months of 2021 compared to the same period a year earlier.
The SCA rules were first announced in 2019, but companies have had more time to implement the rules due to the effects of the pandemic, with March 14, 2022 being the final deadline.
Major payment providers are already well poised to help consumers navigate the change, with Visa, Mastercard and Stripe offering a variety of services for both groups.
If your business still needs advice or guidance, the FCA has an online portal with all the information here.