Build Trust with Frictionless Authentication

is a regulatory requirement introduced under the EU’s Payment Services Directive 2 (PSD2). Its goal is to make online payments and digital transactions more secure, reducing fraud while protecting consumers.

SCA requires that customers authenticate themselves using at least two out of three independent factors:

1. Something they know — for example, a password or PIN.
2. Something they have — such as a mobile phone, hardware token, or card.
3. Something they are — biometric identifiers like a fingerprint, facial recognition, or voice pattern.
   

For a transaction to be approved, at least two of these must be used together. This makes it significantly harder for attackers to gain unauthorized access, since stealing one factor is no longer enough.

In practice, SCA applies whenever a customer makes an electronic payment, accesses their account, or performs an action that could pose a risk of fraud. While its most visible use is in online banking and e-commerce, SCA principles are increasingly applied to any sensitive digital interaction where trust and security are critical. Digital transactions are under more scrutiny than ever. To protect users and meet regulatory requirements such as PSD2, businesses must ensure that every online payment and identity interaction is both secure and seamless. Strong Customer Authentication (SCA) provides that safeguard, requiring multi-factor verification that balances compliance with user experience. With Hovi, SCA becomes not just a regulatory requirement but a competitive advantage.

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Rising Fraud and Stricter Regulations

As digital commerce expands, so does fraud. Passwords alone are no longer enough to protect transactions, and outdated authentication methods create friction that frustrates customers. Regulators have responded with frameworks like PSD2 in Europe, mandating Strong Customer Authentication for payments and sensitive actions.

For businesses, this presents a double challenge: how to remain compliant while keeping customer journeys smooth and efficient. Too much friction causes cart abandonment and lost revenue, while too little control risks compliance penalties and financial loss.

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Verifiable Strong Customer Authentication

Strong Customer Authentication requires at least two independent factors: something the user knows, something the user has, and something the user is. Hovi enhances this by integrating Self-Sovereign Identity (SSI) and verifiable credentials into the process.

Instead of forcing customers through repetitive checks, Hovi enables them to authenticate once and then reuse verified credentials across transactions. Credentials are cryptographically secure, privacy-preserving, and interoperable, ensuring businesses can meet PSD2 requirements without sacrificing the user experience.

With Hovi, authentication is not just strong; it is reusable, compliant, and user-centric.

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Why It Matters

The future of digital payments depends on striking the right balance between security and convenience. Strong Customer Authentication addresses fraud and compliance requirements, but how it is implemented determines whether customers stay loyal or drop off.

By using Hovi’s platform, businesses gain the ability to:

• Reduce fraud through tamper-proof, verifiable credentials.
• Meet PSD2 and eIDAS 2.0 requirements with confidence.
• Streamline the user experience by eliminating repeated verification steps.
• Build trust with customers who know their data and transactions are protected.
  

SCA done right is more than compliance — it is an opportunity to build trust and strengthen customer relationships.

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Real-World Use Cases

Strong Customer Authentication powered by verifiable credentials applies across industries that rely on secure digital transactions.

In e-commerce, customers can prove their identity and payment method instantly, reducing cart abandonment while preventing fraud. In banking and financial services, SCA ensures that every high-value transfer or account login is authorized by the rightful user, protecting both institutions and customers. In healthcare, sensitive digital transactions such as prescription orders or insurance claims can be protected through strong, reusable identity checks. Even in travel and mobility, customers can securely book, pay, and verify access using authentication methods that work seamlessly across borders.

These use cases demonstrate how SCA creates a secure foundation for digital services while improving the experience for users.

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How Hovi Delivers SCA

Strong Customer Authentication is the backbone of secure digital services. With Hovi, you can turn regulatory requirements into a seamless, trusted experience that protects both your business and your customers.

The process works in three steps:

1. Issuance: Customers receive verifiable credentials, such as proof of identity or account ownership, issued through Hovi’s APIs or Studio.
2. Authentication: During a transaction, the customer presents these credentials along with a second factor, such as biometrics or device-based verification.
3. Verification: Hovi validates the proof in real time, ensuring the request meets both compliance and security standards before approval.
   

Hovi brings together compliance, interoperability, and user experience into one platform. Our solution is built to meet the highest regulatory standards, supporting PSD2, eIDAS 2.0, and GDPR from the ground up. This ensures that businesses can implement Strong Customer Authentication with full confidence in their compliance posture.

Beyond regulation, Hovi is designed for interoperability. It integrates seamlessly with European Digital Identity Wallets and global standards, making it future-proof for a rapidly evolving identity ecosystem. Security is at the core of our approach, backed by ISO 27001 certification, enterprise-grade encryption, and robust access controls.

Most importantly, Hovi is proven in practice. We have issued verifiable credentials across multiple industries and geographies, helping organizations reduce fraud, simplify compliance, and deliver smoother user experiences. With Hovi, Strong Customer Authentication becomes more than a requirement—it becomes a foundation for trusted digital growth.