What Is Strong Customer Authentication (SCA) and Why the Status Quo Still Falls Short
In the ongoing battle against fraud and digital identity theft, Strong Customer Authentication (SCA) has emerged as a critical safeguard. Mandated in regions like the EU under the PSD2 directive and gaining traction globally, SCA aims to ensure that users are who they say they are before transactions are approved or sensitive information is accessed.
But while the principle of SCA is sound, the way it’s currently implemented often adds friction for users and complexity for businesses. Here’s a closer look at what SCA entails, how it’s typically handled today, and where there’s room for something better.
The Basics: What SCA Actually Means
At its core, SCA requires the use of at least two of the following three authentication factors:
- Something you know (for example, a password or PIN)
- Something you have (such as a phone, hardware token, or smart card)
- Something you are (such as a fingerprint or facial recognition)
The goal is to make unauthorized access significantly harder by layering multiple types of identity confirmation. This is especially important in industries where digital fraud is rampant, including banking, fintech, and e-commerce.
The Go-To Approaches: Current Industry Solutions
One-Time Passwords (OTPs)
This is the most common method. Users receive a temporary code via SMS, email, or an app to complete a transaction. While easy to implement, OTPs are vulnerable to SIM swapping, phishing, and man-in-the-middle attacks.
Authenticator Apps
Apps like Google Authenticator or Microsoft Authenticator generate time-based codes locally on a device. These are more secure than SMS OTPs, but they still require users to manually enter a code, which introduces friction and the potential for error.
Biometrics
Fingerprint and face recognition are increasingly common in mobile banking. While convenient, these methods are often tied to a single device and depend on hardware compatibility. They may also be bypassed in certain spoofing scenarios.
Push Notifications
Services like Duo or Okta verify identity by sending a push notification to the user’s device. This improves the experience compared to typing in codes but still depends on device trust and connectivity. Push notifications can also be exploited by phishing attacks if not implemented carefully.
The Catch: SCA Is Secure but Not Always Smart
In theory, these methods fulfill SCA requirements. In practice, many fail on two key fronts:
- User experience. If customers struggle to complete authentication, especially during checkout or sign-in, they are likely to abandon the process. This leads to lower conversion rates.
- Security versus simplicity. Businesses often feel forced to choose between strong but inconvenient solutions or smoother but less secure ones.
It is a constant tradeoff, and one that many current systems do not manage well.
A Better Way: Secure Authentication Without Compromise
Most SCA implementations assume that friction is unavoidable. But that is not the case.
Newer technologies are proving that authentication can be both secure and invisible. By using device-bound signals, trusted hardware modules, and contextual cues like location or behavioral patterns, businesses can verify a user’s identity in the background. There is no need to enter a code or approve a push notification. It just works.
This kind of behind-the-scenes security not only meets regulatory requirements like SCA but also improves the user experience. And the fewer steps users have to take, the more likely they are to complete their transactions.
Some companies are already delivering authentication like this. They are showing that it is possible to protect customers without interrupting them.
Final Thoughts
Strong Customer Authentication is necessary, and it is not going away. But the way most companies approach it needs to change. The best security does its job without making users jump through hoops. It keeps people safe without getting in their way.
As threats evolve and digital regulations mature, the businesses that thrive will be the ones that adopt authentication methods that are not just strong, but also seamless.
Sources
https://ec.europa.eu/info/law/payment-services-psd-2-directive-eu-2015-2366_en
https://www.enisa.europa.eu/news/enisa-news/strong-customer-authentication-under-psd2-and-its-impacts
https://www.nets.eu/payments/strong-customer-authentication/Pages/default.aspx
https://www.okta.com/resources/whitepaper-strong-customer-authentication-sca-explained/
https://auth0.com/blog/what-is-strong-customer-authentication/
