August 17, 2022

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New online shopping rules mean your cards might be declined from Monday

5 min read

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Online shoppers will see a change from next week – as new checks are being introduced in a bid to prevent online fraud.

The new rules start from March 14, and mean that customers will have to enter a code, which will usually be sent to their mobile phone.

The code will confirm that the purchase has been authorised by the person the card belongs to, ChronicleLive reports.

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If they are unable to verify the identity of the person making the purchase then the transaction may be declined.

As a result, online shoppers may see some purchases declined as the new system is introduced.

The changes are coming in under new Financial Conduct Authority (FCA) fraud-prevention rules, known as ‘Strong Customer Authentication (SCA).

The idea behind the move is to create a new layer of security to protect shoppers and their money, but some banks have already warned their customers that card payments could be declined as some retailers may not be ready by March 14.

Late in January, First Direct told current account holders: ‘As we get closer to the regulatory date, the number of times you’ll notice you’re asked to verify it’s you making the payment will increase.

‘If the retailer isn’t ready for the new process, there could be times when your card might be declined.’

Here’s everything you need to know about the new rules.

Everything you need to know about the new rules

Why are the rules changing?

The new checks are aimed at clamping down on bank card fraud, where crooks go on a spending spree using stolendetails.

What exactly is changing?

From Monday, online retailers will be required to verify shoppers’ identities before authorising a payment.

A one-time passcode will usually be sent via text message, but most banks offer the option of email or an automated message to your landline if your internet signal is poor.

Alternatively, you may be asked to approve payments by logging into your bank’s mobile app.

Will I have to verify every time I buy something?

Card provider Mastercard estimates one in every four payments will require the extra check.

Is anything exempt from verification?

Some online transactions are exempt, such as low-value purchases and those deemed to be a minimal risk by banks.

Retailers with low fraud levels will also be able to wave through larger payments without going through any further checks.

What about monthly payments or subscriptions, like Netflix?

If you make regular payments for subscriptions on your card, you will not be asked to enter a code each time the money leaves your account.

My signal is not great. What happens if I don’t get the message?

Make sure your bank has all of your contact details so there are alternative ways of reaching you, such as mobile and landline numbers and an email address.

It’s not clear currently whether card firms will have to try more than one avenue for verification, and which if any they must do first.

I’m already verifying some payments. What’s changing?

Some banks and retailers are already using the extra security check for customers spending a large sum of money or when they use a website for the first time.

The new rules were supposed to be in place by September 14, 2019. But the deadline was extended by 18 months, and then pushed back again due to the pandemic.

The new SCA verification process is an extension to the rules that has applied to online and mobile banking since 14 March 2020, so you may have already noticed certain actions requiring identity confirmation, including logging in and transferring money to somebody else.

And SCA checks also already apply if you make multiple contactless payments in a row totalling more than £300, when you are asked to verify your identity by entering your PIN.

Will this apply to all payments?

Each provider will have its own definition of ‘high risk’ and ‘low risk’ transactions, but, according to Moneysavingexpert.com, the following are typically more likely to be verified:

  • Online payments over £25;
  • Online payments up to £25 where you’ve made multiple payments in a row totalling more than £85;
  • New or modified recurring payments.

Will I have to verify Paypal or Klarna payments?

The new rules also apply to transactions made through PayPal and buy-now-pay-later firms, such as Klarna.

What about Apple Pay?

Apple Pay already meets the requirements, as customers must enter a passcode or prove their identity using fingerprint or facial-recognition technology.

Are all retailers ready for Monday?

Many larger stores, such as Amazon and Asda say they have been prepared for the new rules for some time.

But smaller stores may struggle to meet the deadline – and risk significant losses if payments are declined.

Mike Cherry, chairman of the Federation of Small Businesses, said: “With current turbulent economic conditions, small retailers already have a lot on their plate and may not have the bandwidth to manage this alone, especially if a small online retail operation is a bolt-on to a mainly bricks-and-mortar business.”

How do I know the text is not a scam?

Your bank or card firm will never ask your PIN, password, date of birth, address or other personal details to verify a payment under this system, so if you’re asked for anything other than a verification code it’s likely a scam.

It’s also important to remain vigilant and be aware that some scammers may use these new rules as an opportunity to try to get their hands on your personal and financial information.

If my payment is declined, will it affect my credit score?

Your credit or debit card being declined won’t have any impact on your credit score.

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