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strong-customer-authentication-best-practices-for-b2b-and-high-risk-merchants
Strong Customer Authentication (SCA) has become a core requirement for businesses processing digital payments, especially in regulated markets such as Europe. However, for B2B companies and high-risk merchants, SCA is much more than a compliance obligation: it is a strategic lever to reduce fraud, prevent chargebacks, and protect payment approval rates.
This guide explores Strong Customer Authentication best practices, focusing on real-world payment operations, fraud prevention, and scalability for B2B and high-risk business models, with practical insights aligned with how NextGen Payment supports merchants operating in complex environments.
Strong Customer Authentication is a security framework introduced under PSD2 (Payment Services Directive 2) that requires payment service providers to verify a customer’s identity using at least two independent authentication factors:
The objective of SCA is to reduce payment fraud, particularly card-not-present (CNP) fraud, while increasing trust in digital payments.
For B2B merchants, SCA is not simply a checkbox — it directly impacts conversion rates, payment acceptance, and long-term account stability.
High-risk and B2B businesses operate under increased scrutiny from acquiring banks and card schemes. Poor SCA implementation can lead to:
When applied correctly, Strong Customer Authentication best practices help:
This is where NextGen Payment plays a critical role, combining fraud prevention, chargeback protection, and payment orchestration into a unified approach.
A common misconception is that SCA replaces fraud prevention tools. In reality:
SCA helps confirm that a legitimate customer is initiating the transaction. Fraud prevention solutions analyze behavioral patterns, velocity, device fingerprinting, and transaction context to identify suspicious activity — even before authentication is triggered.
At NextGen Payment, SCA is treated as one layer within a broader fraud prevention ecosystem, not as a standalone solution.
Over-Authentication and Conversion Loss
Applying SCA to every transaction can:
Not applying SCA when required can:
Strong Customer Authentication best practices focus on balance, not extremes.
Not all transactions carry the same risk. Merchants should apply SCA dynamically based on:
Risk-based SCA reduces friction while maintaining compliance.
PSD2 allows exemptions that, when used correctly, significantly improve performance:
High-risk merchants working with experienced payment partners like NextGen Payment can leverage these exemptions safely without increasing fraud exposure.
3D Secure 2.0 (3DS2) is the most common technical implementation of SCA for card payments.
Best practices include:
A poorly configured 3DS flow can damage approval rates more than fraud itself.
One of the most important — and often overlooked — benefits of SCA is liability shift.
When SCA is applied correctly:
This alignment between SCA and chargeback protection is a core component of NextGen Payment’s risk management approach.
Learn more about chargeback protection here:
https://www.nextgenpayment.eu/services/chargeback-protection
Successful SCA strategies are measured not only by compliance, but by performance metrics such as:
Continuous monitoring allows merchants to fine-tune their SCA logic over time.
B2B transactions often involve:
Best practices include:
SCA is usually required only for:
Optimized flows reduce churn and prevent unnecessary authentication challenges.
Industries such as iGaming, digital services, and online platforms require:
This is where NextGen Payment’s high-risk expertise becomes a differentiator.https://www.nextgenpayment.eu/high-risk-merchant-account
Cross-border transactions add complexity:
Best practices include:
Payment orchestration combined with SCA optimization helps maintain approval rates globally.
Implementing Strong Customer Authentication best practices requires more than technical integration. It requires:
NextGen Payment supports merchants by combining:
This integrated approach allows businesses to stay compliant without sacrificing growth.
SCA continues to evolve, with trends such as:
Merchants who treat SCA as a strategic capability, not a regulatory burden, will gain a competitive advantage.
Strong Customer Authentication is not just a compliance requirement — it is a strategic component of modern payment risk management.
For B2B and high-risk merchants, applying Strong Customer Authentication best practices helps protect revenue, reduce fraud, prevent chargebacks, and maintain healthy acquiring relationships.
With the right payment partner, SCA becomes an enabler of secure growth rather than a barrier.
NextGen Payment helps businesses implement SCA intelligently — balancing security, compliance, and performance at scale.
Strong Customer Authentication (SCA) is a security requirement under PSD2 that verifies a customer’s identity using at least two independent authentication factors to reduce payment fraud.
SCA is generally required for electronic payments in Europe, unless a valid exemption applies, such as low-value transactions or low-risk payments.
SCA applies to B2B card payments when PSD2 conditions are met, but many B2B transactions qualify for exemptions, especially when risk levels are low or transactions are recurring.
When SCA is correctly applied, liability for fraud-related chargebacks often shifts to the issuer, significantly reducing merchant exposure and dispute volume.
SCA authenticates the customer’s identity, while fraud prevention solutions analyze transaction risk using behavioral data, rules, and machine learning. The most effective strategies combine both.
Poorly implemented SCA can lower approval rates. Risk-based SCA and optimized 3D Secure 2.0 flows help maintain high approval rates while staying compliant.
SCA exemptions allow merchants to avoid unnecessary authentication for low-risk transactions, improving conversion rates without increasing fraud exposure.
No. 3D Secure 2.0 is a technical method used to implement SCA for card payments, but SCA can also be applied using other authentication methods.
NextGen Payment integrates SCA optimization, fraud prevention, and chargeback protection to help B2B and high-risk merchants stay compliant while protecting revenue.
SCA is usually required for the first transaction or when payment details change. Subsequent recurring payments may qualify for exemptions.
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