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SMS OTP - PSD2 SCA Compliant or not?

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"or now EBA (5th Oct) has clarified that SMS does constitute as SCA (possession) feature - EBA Single Rulebook Q&A They have also quoted RTS article 22, which refers to confidentiality, integrity & security. While creating the OTP with dynamic linking is SCA compliant but transmission & delivery medium is debated.

Article 22.1 Payment service providers shall ensure the confidentiality and integrity of the personalised security credentials of the payment service user, including authentication codes, during all phases of the authentication

Article 22.4 Payment service providers shall ensure that the processing and routing of personalised security credentials and of the authentication codes generated in accordance with Chapter II take place in secure environments in accordance with strong and widely recognised industry standards

EBA has gone with practicality rather than enforcing RTS stringently. SMS has long been stable form of second factor authentication in legacy plagued banking infrastructure. Also educating customers on new SCA devices and methods will lead to issues in terms of customer experience.

So SMS is it? Probably not. We would advise banks to use SMS with caution."

From "SMS OTP - PSD2 SCA Compliant or not?".

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