Zalando begins two-factor authentication ahead of SCA
Written by Peter Walker
Zalando has become one of the first retailers to implement a two-stage authentication process for online orders, ahead of the September Strong Customer Authentication (SCA) deadline.
The online clothing retailer has partnered with Ayden to introduce the new payment procedure, which will require customers to offer two separate authentication methods in order to checkout.
These include a password, a PIN, a mobile number, a payment card number or something unique to the customer, like a fingerprint.
The measures are being introduced to comply with the SCA portion of the EU second Payment Services Directive (PSD2) regulations, which require an extra level of verification for most online payments above €30.
The measures are designed to reduce fraud, but require substantial changes to processes and technology at retailers, banks and payment processors, as well as the co-operation of millions of consumers, who remain largely unaware of the imminent changes.
The Financial Conduct Authority (FCA) responded to the European Banking Authority’s opinion on SCA, agreeing that some firms will be given extra time to implement the rules.
The legal deadline for complying with the regulatory technical standards remains 14 September, but in a statement, the FCA recognised the challenges in meeting this deadline and said it has been working to develop a plan to migrate the industry to implement SCA for card payments in e-commerce as soon as possible.
Europe stands to lose €57 billion in economic activity in the first 12 months after SCA takes effect, according to surveys conducted for payments infrastructure company Stripe with 500 qualified payment professionals at online businesses and 1,000 consumers in the UK, France, Germany, the Netherlands and Spain.
“Customer focus in combination with technology and speed are part of our DNA,” stated Kai-Uwe Mokros managing director of payments at Zalando. “We are therefore pleased to be one of the first companies to successfully implement SCA together with Adyen.”
Alexa von Bismarck, Ayden’s country manager for Germany, added: “For Zalando and Adyen, our top priority is to make sure that customers can pay securely online, with a great shopping experience. This is exactly what Adyen’s 3DS 2 solution can guarantee.”