South African Bank to pass on 3D-Secure Non-Compliance Fees

SOUTH AFRICA | South Africa’s First National Bank (FNB) has informed their online merchants that the bank will be passing on any fines it incurs from the Payments Association of South Africa (PASA) for failure to meet the deadline to be 3D Secure.

3D Secure Mandate

Due to the increase in card not present (CNP) fraud in South Africa, PASA had mandated that all ecommerce merchants must implement 3D Secure by February 28 last year (read the article). The term '3D Secure' refers to various authentication services developed by card schemes like MasterCard and Visa to prevent fraudulent use of card details for purchases over the internet.

3D Secure software aims to identify the legitimate cardholder at the moment of the online purchase by requesting static or one-time-passcodes only known to the genuine cardholder. By challenging shoppers to enter this 3D secure passcode, it makes it very difficult for fraudsters to complete purchases.

Pre-condition for a full 3D secure transaction is that both cardholder and merchant participate in the 3D secure programmes. For merchants it entails they should implement 3D secure software in their payment set-up.

3D secure payments

Banks subject to non-compliance penalties

In December last year, almost nine months after the deadline for 3D Secure compliance had passed, PASA wrote to all South African banks saying it was “committed to ensure a robust and consistent implementation”, and saying all acquirers – banks – not complying with the regulations by March 1, 2015 would be subject to monthly penalties until compliance is achieved. The penalties include a one-off fine of around 7,500 euro (ZAR 100,000) per merchant, and fines of 3,750 euro (ZAR 50,000) per merchant for every month of non-compliance thereafter.

FNB passing on fines

FNB has since written to its e-commerce merchants that the bank will be passing on these fines, stressing the benefits of 3D Secure and the merits of PASA. FNB said that any merchant who is not 3D Secure compliant by March 1 would accept all risk and liability associated with non-compliance. The bank also reserves the right to suspend all merchant acquiring services to non-compliant companies and debit the merchant’s nominated bank account.


Sourced from Payments Afrika, News Update, February 19th, 2015

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