Banks have added extra security checks for online shoppers, requiring consumers to have a mobile phone with a strong signal.
If you are planning to do your Christmas shopping online this year, you may well need your mobile phone and good signal in order to pass new security measures called the ‘Strong Customer Authentication’ and form part of the Payment Services Directive. These measures could spell trouble for those consumers who live in rural areas, or those who don’t have a mobile phone, and banks are now being encouraged to find an alternative way to check customers’ identities.
If you spend more than £27 when shopping online, your payment provider is required to ask for an additional form of identity verification, which will be a one-off password sent by text to your mobile phone. This will also happen if you spend a total of £90 on one card, or if you make five different payments of £27.
There are a few exceptions though. For instance, your retailer might decide that your purchase is low risk, or if your bank can show to the regulator that it has a reliable record on fraud, “it can allow exemptions on payments worth up to about £450”.
For those who wouldn’t be able to use this system of verification, it has been suggested they find another way to pay, for example with PayPal. However, UK Finance has instructed banks that they need to find a solution themselves, “such as by phoning them on their landline, or by using biometric data”. Another alternative is to have customers contact the bank directly to get a one-off approval for an online transaction.
These security measures “are part of an EU directive” which will come into effect in September 2019. UK banks are working to get the verification systems up and running smoothly before then, but are also under pressure from retailers who do not want the shopping process slowed down.
Bank First Direct is one of the first banks to have already introduced the extra verification step. Other banks are being told to explain the new changes more affectively to their customers to avoid confusion and disruption.
The second part of the Payment Services Directive is aimed at combatting fraud, and has also introduced the idea of open banking to EU member states.
James Daley, the managing director of Fairer Finance, explained how these changes may make things difficult for certain groups of people. “Banks are not yet great at looking after people at the margins—because they’re disabled, or because they live with no mobile coverage.
“These systems are designed for the 95%–while the remaining 5% are hung out to dry.”