For non-European Economic Area (EEA) companies looking to do business in Europe, it’s important to understand one leg out transactions.
On this page, we’ll explain exactly how one leg transactions work and how Checkout.com can help you implement payment authentication in your business.
A one leg out transaction in the payments industry refers to a cross-border payment where only one part of the transaction is regulated under the European Union (EU) payment laws. This occurs when one of the parties involved in the transaction (either the acquirer or the issuer) is located in the (EEA) and the other party is outside of it.
For instance, if a customer in the United States uses their credit card to purchase goods from a merchant in Germany, this is considered a one-leg-out transaction
Strong Customer Authentication (SCA) was introduced in Europe under the PSD2 regulations. It is designed to make online card payments more secure by requiring customers to complete a multi-factor authentication process. However, there are some types of transactions where SCA is out-of-scope or where SCA exemptions can be applied.
One leg out transactions are considered out of scope and therefore, SCA is optional. However, there are many reasons merchants may still choose to apply SCA
What about the UK?
Even though the UK has left the European Union and EEA as a result of Brexit, SCA is still enforced here.
Therefore a transaction that involves a credit card issued in the UK being used to purchase goods in Germany is not a one-leg-out transaction.
Even though one leg out transactions are out of scope of SCA requirements, implementing it even when not explicitly required can offer several benefits to businesses such as:
Fight fraud and stay compliant with Checkout.com’s Authentication solution, available as a standalone product or as part of our platform.
Visit our Authentication product page to learn more in get in touch with the team to learn more.