EU’s New Online Payment Rules Risk Heightening Fraud Without Collaboration
New European rules mandate Strong Customer Authentication (SCA) for all online transactions, but relying solely on this method may increase fraud risks. The European Banking Authority has reviewed these rules and sent them back to the European Commission for final approval.
SCA, a security technique required by the new rules, aims to combat fraud in online transactions. However, relying solely on it could make the payments ecosystem more vulnerable, as fraudsters may focus on overcoming this single layer of protection.
Experts suggest a collaborative approach involving banks, payment card providers, consumers, and merchants to develop and apply multiple fraud prevention systems. Organizations like INFORM GmbH with its RiskShield system and initiatives such as the EU Digital Identity Wallet project are already working together to combine advanced authentication technologies, AI-driven fraud detection, and multi-layered security measures. This collaboration could lead to better fraud prevention and a seamless shopping experience for customers.
The draft rules could be improved to allow merchants with excellent fraud prevention records to use their systems alongside SCA, without negatively impacting customers. This balance between regulation and flexibility could strengthen the overall security of the payments ecosystem.
