FNB to Pass on PASA 3D Secure Compliance Fines to Merchants

South Africa’s First National Bank (FNB) has written to merchants to inform them it 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.

PASA had mandated that due to the increase in card not present (CNP) fraud in South Africa, all e-commerce merchants must implement 3D Secure by February 28 last year.

3D Secure refers to various authentication services which mean only the cardholder can use a card, with examples including Verified by Visa and MasterCard Secure Code.

The regulations were opposed by companies such as Groupon South Africa, Takealot and uAfrica, who said such fraud detection systems could “inflict irrevocable harm to the local industry”.

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 ZAR100,000 per merchant, and fines of ZAR50,000 per merchant for every month of non-compliance thereafter.

FNB has since written to e-commerce merchants that are clients of the bank to advise that it will be passing on these fines, stressing the benefits of 3D Secure and the merits of PASA.

“FNB Merchant Services is required by PASA to assist in ensuring that all e-commerce merchants are 3D Secure compliant. PASA performs a crucial function in the South African economy by assisting the South African Reserve Bank in managing the safety and integrity of the National Payments System, through which all payments between financial institutions must flow,” the letter read.

FNB said any merchant not 3D Secure compliant by March 1 would accept all risk and liability associated with non-compliance, and absolve FNB of any responsibility for “penalties, claims, actions, liabilities, damages, costs and/or expenses of whatsoever nature instituted against or incurred by FNB as a result of the merchant not being 3D Secured”.

The bank also reserved the right to suspend all merchant acquiring services to non-compliant companies and debit the merchant’s nominated bank account.

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