“Most small businesses” are unaware of new EU payment rules to be rolled out from September 2019, the Federation of Small Businesses (FSB) has warned.
The new legislation – known as Strong Customer Authentication (SCA) – is designed to protect EU e-commerce consumers from fraud.
Under the proposed rules, shoppers will be required to provide two types of authentication (such as a password and an SMS code) in order to make an online purchase with a transaction value of more than 30 euros (approx £27).
However, the FSB has warned that with just a few months until the new protocol goes into effect, “most small business owners have never even heard of SCA, let alone understand how it will impact their firms”.
In an effort to help small firms, the Financial Conduct Authority (FCA) – the regulator in charge of overseeing the SCA roll-out in the UK – recently advised that it will not take enforcement action against firms if they do not meet the relevant requirements for SCA from 14 September 2019.
While the exact breathing period is unknown, the FCA says it will work with the industry to develop a plan to “migrate the industry to implement SCA for card payments in e-commerce as soon as possible after this”.
Please note that enforcement action will only be stalled if firms evidence that they have taken necessary steps to comply with SCA legislation.
Responding to the announcement, FSB National Chairman Mike Cherry said: “It’s encouraging to see the FCA listening to our concerns about SCA and exercising some common sense. Of course, it’s right that consumers have maximum protection against fraud, but enforcing change of this magnitude before everyone’s fully prepared for it will be bad for shoppers and small businesses alike.”
He added: “We’ll be working with the regulator to ensure necessary awareness levels have been reached before enforcement action starts and timeframes are sensible. Small firms will need at least 18 months to adjust to these new rules.”