Overhaul of card payment system delayed as critics warn of 'two-step chaos'

0
26


A radical overhaul of payments on plastic has been delayed amid fears the new security measures will cause chaos for online shoppers.

Following concerns from the country’s three biggest retail organisations that a “two step” verification for card transactions would fail in large numbers, the City watchdog has kicked the plan into extra time.

For the British Retail Consortium (BRC), Federation of Small Businesses (FSB) and UK Hospitality warned that three quarters of small online retailers and websites did not have the right software to cope with the anti-fraud system.

In a joint letter to regulator the Financial Conduct Authority (FCA) they predicted one in three online transactions would fail as the new system would ask cardholders for a code or password sent to their smartphones in real time by their bank to authorise payment.

It’s feared one in three payment attempts would fail under the new system

 

The extra layer known as Strong Customer Authentication (SCA), for single transactions of more than £27 is an EU directive that was set to launch on September 14.

But industry bodies said those in areas where there was a poor signal or who did not have a smartphone would have to use card readers or have a message sent to a landline before they could complete payment, leading to confusion and empty baskets.

Lib Dem MP Chuka Umunna called the two-step process a “ticking time bomb for retail”.

Chuka Umunna
Chuka Umunna has criticised the two-step process

 

Today, the BRC welcomed the delay and said it would give businesses a chance to make the software changes to prevent “a situation where 25-30% of e-commerce transactions would be at risk of failing.”

Andrew Cregan, payments policy advisor at the BRC said: “The smooth roll-out of SCA is essential to minimising any disruption in online transactions, while also strengthening the protections that customers have in their digital purchases.

“We’re calling for a pause in enforcement that will be long enough to ensure that banks and retailers are able to implement the necessary technical fixes.”

Read More

Martin Lewis’ top money advice

According to the BRC 76% of all retail sales are made on plastic but it said 75% of retailers and “most consumers” were unaware of the changes.

The FCA accepted the industry faced challenges in meeting the September deadline and said it was pushing it back as a “response to concerns about industry’s preparedness and ability to comply with the requirements for SCA”.

In a statement it added: “Once the group has finalised the plan and we have agreed it, we expect all participants to meet the agreed milestones, targets and final delivery date.”



LEAVE A REPLY

Please enter your comment!
Please enter your name here