PSD3 Regulatory Changes on SCA and APP Fraud Prevention

This white paper discusses the ongoing regulatory changes in the European Union regarding digital banking and payment services, specifically focusing on the evolution of Strong Customer Authentication (SCA) and the prevention of Authorised Push Payment (APP) fraud. It outlines the recent legislative developments, including the draft proposals for the Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR) published by the European Commission. The paper details the modifications in the definitions and requirements of SCA, emphasizing the need for diverse authentication mechanisms to cater to all users, including those with disabilities. Additionally, it presents the significant changes in the approach to APP fraud, including the introduction of an IBAN/name matching service and expanded liability for impersonation fraud. The document highlights the implications of these changes for payment service providers (PSPs) and the necessity for compliance with the new regulations to enhance consumer protection against fraud.