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Updates from Avondata and the hospitality technology sector

Strong Customer Authentication (SCA): the lowdown

As our customers and wider industry colleagues will be well aware, the deadline for UK businesses to implement Strong Customer Authentication (SCA) as prescribed by the EU’s Payment Services Directive (PSD2) has been delayed until March 2021, having previously been set for September this year.

The implementation of SCA – a two-step verification process – is intended to enhance security and reduce fraud when a payment is being authenticated. However, earlier this year, the Financial Conduct Authority (FCA) agreed to extend the SCA deadline by 18 months owing to the complexity of introducing such a system and the possible impact on consumers.

SCA presents particular challenges for the hospitality industry; the many ways a guest can book with a hotel or accommodation provider introduces complex payment flows and the technology required to manage SCA of the payments between such complicated distribution channels is not yet in place.
Fraud is evidently a significant issue facing the industry these days and the move towards more secure authentication protocols is undoubtedly welcomed, but the FCA’s decision to allow additional time before enforcing SCA has also been well received as more time is required to introduce this form of authentication into such a complex distribution model.

As a leading PMS provider, we are working closely with our channel manager and payment gateway partners to support our hoteliers and customers during this transition period, and to help with the development of new payment flows in order to meet PSD2 requirements.

If you have any questions about SCA, please don’t hesitate to get in touch! Otherwise, you can find out more information here.