The SCA is a new requirement for e-commerce to enhance the security of payments. It will apply on identity confirmation when consumers access their payment account online, undertake any other action which may imply a risk of fraud, or initiates an electronic payment.

The obligation to apply SCA in e-commerce lies with the card issuer. However, the requirement affects affect the entire payments chain because, if merchants do not update their payment gateways to enable the issuer to perform SCA on the card holder, card issuers may start declining those transactions.

Any firm that fails to comply with the requirements for SCA will be subject to full FCA supervisory and enforcement action.

Buy Now Pay Later (BNPL) is a new form of interest-free, unsecured credit payment option for consumers. In response to its increasing popularity, BNPL products are to become regulated by the FCA to ensure consumers are adequately protected.

This will have significant impact for those currently participating in the market. Firms are likely to need to be authorised and there are potential impacts on the authorisation status of retailers offering BNPL as a payment mechanism. Disclosure requirements may be introduced and friction in the customer journey for consumers using BNPL as additional compliance requirements are placed on firms offering BNPL.