FCA delays SCA payments rules after threat to sales
The UK’s Financial Conduct Authority (FCA) is set to delay enforcement of new EU online payments regulations by more than 18 months, after warnings that the rules would hamstring online sales, according to the FT.
New “strong customer authentication” rules, which will require most online payments to go through an extra level of verification to reduce fraud, are due to be introduced in September, but industry groups said that a lack of preparedness would make more than a quarter of payments impossible to complete.
In an update in June, the European Banking Authority rejected calls for a continent-wide grace period, arguing that companies had more than three years to prepare.
But critics of the rules said certain key technical details were not confirmed until this year, and companies have turned to national regulators to plead for more time.
The FCA asked the trade group, UK Finance, to design an alternative timetable for the UK. Its final recommendations, which were agreed with major financial, retail and travel groups, were submitted to the regulator last Friday.
According to the FT, the report notes that companies should have until March 2021 to implement most of the technical requirements, and a further six months to implement a more advanced form of authentication.
The FCA, which was consulted throughout the design process, is expected to formally endorse the recommendations next week, and will meet key industry stakeholders on Tuesday.
Banks, tech groups and retailers had initially pinned their hopes on the EBA, Europe’s top banking regulator, for a transition period that would apply across the EU. However, it agreed only to let national regulators “provide limited additional time” on a local basis.
The decision sparked worries that different countries could take different approaches to the rules, creating expensive complications for multinational firms and encouraging “regulatory arbitrage” as companies move their operations to areas that took a more lax approach to enforcement.
UK Finance and the FCA declined to comment.