Sca Agreement

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What is an SCA Agreement?

If you`re a merchant accepting payments online, you`ve probably encountered the term „SCA” in recent years. SCA stands for „Strong Customer Authentication” and refers to the requirements introduced by the European Union`s Payment Services Directive 2 (PSD2) in 2019. SCA is a set of security measures aimed at reducing fraud and increasing the security of online payments.

Under SCA, payment providers are required to identify the customer using at least two out of three authentication factors: something the customer knows (such as a password or PIN), something the customer has (such as a mobile phone or token), and something the customer is (such as biometric data).

To comply with SCA, merchants and payment providers must implement the necessary technical solutions and processes. This is where the SCA agreement comes into play.

An SCA agreement is a contract between a merchant and a payment provider that outlines how the parties will comply with SCA requirements. The agreement should specify which authentication methods will be used, how the authentication process will be carried out, and who will be responsible for any associated costs or liabilities.

Why is an SCA Agreement Important?

Complying with SCA is not optional. Merchants and payment providers face fines and other penalties if they fail to meet SCA requirements. Therefore, it`s crucial to have a clear and comprehensive SCA agreement in place to ensure compliance.

The SCA agreement helps to allocate responsibilities and liabilities between the parties involved. For example, the agreement may specify that the payment provider is responsible for ensuring that the authentication process complies with SCA requirements. On the other hand, the merchant may be responsible for collecting and transmitting the necessary customer data to the payment provider.

Without an SCA agreement, the parties may not have a clear understanding of their roles and responsibilities. This can lead to disputes and confusion, which can delay the implementation of SCA and increase the risk of non-compliance.

Conclusion

In summary, an SCA agreement is a critical element of complying with the PSD2`s SCA requirements. The agreement outlines how the parties involved will implement SCA, who will be responsible for each aspect of the process, and how any associated costs or liabilities will be allocated. By having a clear and comprehensive SCA agreement in place, merchants and payment providers can work together to ensure the security and integrity of online payments.