Exemption from SCA based on TRA

We advised an international acquirer on the following project:

DEFINITION OF RULES FOR THE NON-APPLICATION OF SCA ON THE BASIS OF THE EXEMPTION FOR LOW-RISK TRANSACTIONS IN ARTICLE 18 RTS SCA CSC BY ACQUIRER AND CARD ISSUER

Pursuant to Article 32(i) of the Payment Services Act, each payment service provider, including an acquirer or payment card issuer, should apply a strong customer authentication mechanism, among other things, when a cardholder initiates an electronic payment transaction and it is an online transaction (e-commerce, etc.), strong customer authentication involves elements that dynamically link the payment transaction to a specific transaction amount and a specific payee. The so-called RTS SCA CSC (Commission Delegated Regulation (EU) 2018/389 of 27 November 2017 supplementing Directive (EU) 2015/2366 of the European Parliament and of the Council with regard to regulatory technical standards for strong customer authentication and common and secure open communication standards) provides for a number of exceptions to the use of the strong customer authentication mechanism. Article 18 of the RTS contains an exemption that is most important from the perspective of e-commerce conversion, i.e. the exemption for low-risk transactions (TRA exemption). The exemption is ambiguous and subject to complex conditions.

The advisory services of DLK Legal included:

• specification of the conditions that must be met by the acquirer and the card issuer to invoke the exemption
• specification of the possibility and rules for invoking the exemption if any party has failed to implement the mechanisms of Article 18 of the RTS
• identification of the relationship between low supplier risk and low transaction risk