National Payments Vision: Is the UK abolishing PSD2 SCA?

Following the release of the UK Government’s National Payments Vision on 14 November 2024, there’s been a lot of talk – primarily online – around the potential removal of PSD2 Secure Customer Authentication (SCA) in the country.

Let's separate fact from fiction and consider how this impacts merchants and consumers.

The facts and the reports

This impression that the UK will abolish PSD2 SCA or PSD2 altogether comes from the Vision's section 3.53 and is closely linked to the UK leaving the European Union – which means the country is no longer obliged to abide by this regulation.

Specifically, the government has expressed its agreement with the independent Future of Payments Review 2023, which was published last year and led by Joe Garner. The Review pointed out post-Brexit opportunities for additional flexibility in online payments, and recommended an “outcomes-based approach” which, as noted, “can improve the shopping experience and further reduce fraud”.

The Future of Payments Review provided ten recommendations aiming to "improve the consumer experience", "unlock open banking" and "enhance the alignment between the different authorities that oversee this sector".

These included two recommendations around PSD2. Per page 24:

"Revisiting SCA now presents the opportunity to further improve both the point of sale and ecommerce experience. Both are limited to a degree by the need to comply with very detailed SCA technical standards which flow from the EU Payment Services Directive.

We recommend that HM Treasury accelerate the process of taking advantage of the post-Brexit flexibility and that the FCA translate them into outcomes-based rules and/or guidance.

If regulated on an outcomes basis this would increase convenience for consumers and reduce basket abandonment whilst balancing the primary need to manage risk. It will enable firms to compete on consumer experience while managing the fraud risk, rather than being restricted to all follow very prescriptive requirements."

The key recommendation is that the UK can now move away from rigid PSD2 technical standards and "narrow rules", instead providing more flexibility, which is expected to provide better shopper journeys, with less friction:

"It is important that the old technical standards are not translated into equivalent low level regulatory rules, but rather defined in terms of outcomes and regulated as such. This will enable firms to innovate to achieve the outcome – rather than to be compelled to follow the narrow rules which can sub-optimise outcomes."

Our analysis

I believe this is hinting at a more subtle change than some are predicting. Rather than to do away with SCA outright, they are proposing to tone down the highly specific requirements in favour of guidance.

And the chances of this happening any time soon are low.

Even if the UK government decide to speed up adoption of new standards and recommendations, there would have to be both a consulting period and an implementation period to any changes of this type.

At Ravelin, we agree with the findings of the Garner Review and we welcome the National Payments Vision. With the caveat that such a move further complicates merchants’ lives if they transact internationally, because they will have different regimes per country to manage (as they already do).

Of course, this all depends on implementation. There are certainly opportunities to make meaningful change that benefits consumers, merchants and payment providers.

Another thing to keep in mind is that the UK has very high 3D Secure success rates and 3D Secure challenge success rates – the best out of the 37 countries we pulled data from for Ravelin's Global Payments Report 2025.

Specifically:

• The UK is number one globally in terms of the average 3DS success rate, with 93%
• The UK also has the best average 3DS challenge success rate globally, with 94%
• The frictionless rate for the UK, however, is just 61% – not high enough to be in the top five countries.

At Ravelin, we keep a close eye on payments regulations in order to best serve our clients. Time will tell how exactly the sentiments expressed in the Payments Vision will be translated into law.

Rest assured, however, that Ravelin will be working hand in hand with our partners to face whatever changes – and challenges – come our way.