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As of next month, SMS-only authentication will no longer be an option for online payment verification. Photo: Shutterstock 

No more simple SMS authentication for online purchases. As of next month, payments of this kind will require a multi-factor identification, says banking association ABBL, warning that "It is important that you have the necessary tools. (…) Otherwise, you may see payments turned down, a frustration that can be avoided by taking the necessary steps now."

"We are aware that about half of online card transactions today are validated by SMS. This is  the e-consumer’s choice, as other ‘SCA-compliant’ options are available at the time of validation. However this will no longer be a choice as of January 2021. E-consumers will no longer be able to choose SMS as the authentication method," says Ananda Kautz, head of innovation, digital banking and payments at the ABBL.

Introduced to reduce the risk of fraud due to stolen or lost cards, this means that consumers now have to be able to provide at least two different identification elements, such as a password, a card, a mobile phone number, biometric identity, a fingerprint or iris scan. 

Informed but not equipped 

The EU payments directive specifies that strong authentication will be essential to make online payments, which could generate an array of problems. Because, whereas the banks say they are prepared for this long-planned change that was delayed by the health crisis, the ABBL fears that certain consumers are not sufficiently equipped. However, the ABBL believes that it has communicated widely on the subject, also calling customers to ask their bank for information on the steps and procedures to be implemented.

"A large number of cardholders are already equipped with a strong means of authentication, but not all. There is a certain inertia on the part of bank customers who do not respond to information letters. It is difficult to know the exact number of cardholders who are not equipped with a strong means," explains Kautz.

European standardization?

In addition to consumers, merchants will also have to be equipped. Concerning this aspect, the ABBL is skeptical to say the least. "A significant proportion of card transactions are not ‘SCA-compliant’, but perhaps online merchants are waiting until the last minute to get started," says ABBL’s head of innovation, digital banking & payments.

The question remains whether some online platforms will continue to offer simple SMS as an identification option. In this regard, nothing seems to be settled. "There are discussions at a European level on this subject, it is impossible to know at this stage whether some countries will be more flexible in their implementation from January. However, the European banking authority has so far been firm on the implementation of this aspect of the directive. It would seem logical to have a European approach knowing that online shopping can be cross-border," Kautz concludes.

This article was originally published in French on Paperjam.lu and translated and edited for Delano.