iAxept launches new online payment solution to help internet retailers comply with strict EU rules

From: RegTech Analyst

The EU’s new strong customer authentication (SCA) rules have put more pressure on online retailers to ensure shoppers are who they say they are. Now, a UK-based FinTech might have a solution.

iAxept has launched what it claims to be the world’s first SCA compliant payment method using contactless payments cards for internet shopping.

The new SCA rules, which are part of the Revised Payment Services Directive (PSD2), requires customers to prove their identities through a two-factor authentication method when they buy stuff electronically.

iAxept’s solution is to have users tap their contactless cards on the back of their phone. If the purchase is above the contactless limit, the cardholder enters their usual PIN code on their smartphone.

This, the company says, will reduce the risk of card-not-present fraud related financial losses and chargeback costs as the transaction is classed as card-present.

“We have received massive interest from merchants, acquirers and PSPs from all over the world,” said Doug Gray, chief commercial officer at iAxept, “iAxept Online Contactless solution is a perfect solution for the SCA requirement and the EU payment industry needs to act now in order to fulfil the SCA deadline by end of the year without completely disenfranchising their merchant clients with an inferior customer experience and lost sales.”

The SCA rules were originally set to be enforced in September 2019. However, after tremendous pushback from the industry, which said it was not ready to for the rules yet, several authorities around the EU decided to delay the roll out.

In the UK, the Financial Conduct Authority said in August that it would phase in the new SCA rules over an 18-month period.

That does not mean that the problems are not over for financial services providers and FinTech firms looking to make online payments.

For instance, Bó, NatWest’s attempt at fighting back against the slew of new challenger banks tapping into its customer base, had to replace 6,000 of customers’ cards because their old ones were non-compliant with the SCA rules.

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