On October 8, 2015, the European Parliament has passed the proposal of PSD2, aiming to enhance security, innovation, consumer protection and boost competition in the payment market.
The new regulation fully became active between January 13, 2018, and September 14, 2019. However, an additional time period provided to fully implement the new authentication process.
Let us help in clearing all the doubts and bring a clear view of PSD2.
A clear picture of PSD2 and SCA
Amending the existing PSD is the PSD2, aiming to increase user protection and secure payment transaction. The regulation became fully effective on 14th September 2019.
The major change of the PSD2 is the implementation of a new authentication system – Strong Customer Authentication(SCA). Strong Customer Authentication is a new authentication process for the online payment transaction.
The customer has to do a two- way authentication process before proceeding to any online transaction.
The authentication has to be any two of the following process:
- Something only the user has the knowledge. Eg. password, PIN
- Something only the user has. Eg. credit card, debit card, mobile phone
- Something only the user is. Eg. fingerprint, voice pattern, facial feature
Any online transaction not being SCA compliant declined from the bank.
SCA is necessary for online transactions initialized by the customer. This includes card payments, bank transfer and payment service providers like Stripe, PayPal.
But not all transaction needs SCA authentication. There are few exceptions where an online transaction can take place with the absence of SCA.
Cases like the following wouldn’t require SCA authentication:
- Low-value transaction
- Low-risk transaction
- Subscription or recurring transactions
- Whitelisted Merchants
RentALL supports Stripe SCA
RentALL(Airbnb clone) is a customizable rental marketplace script, provides solutions to any niche rental application.
It is updated with the essential API to implement the Stripe SCA, which is available from version 2.2. Users can make the payment using two-way authentication fulfilling PSD2 regulation.
An online marketplace operating in the Europe region must comply with SCA authentication. Make your marketplace SCA compliant before engaging the next transaction.