Since its introduction in the UK, Strong Customer Authentication (SCA) appears to be succeeding in its primary goal – to make online shopping more secure.
Despite initial fears that SCA would introduce more friction for customers at the checkout, new UK research from Barclaycard suggests that the majority of shoppers see it as a positive development, with four in five happy to spend more time at the checkout if it gives them greater protection.
The findings also reveal that almost three-quarters of British retailers have reported a fall in online payment fraud since its mandatory introduction in September 2021. This may help to reassure those European retailers that are still coming to grips with the new requirements.
How does this compare with the EU?
The European Banking Authority (EBA) also suggests that SCA is doing a good job of reducing fraud. Its latest findings show that fraud value is three times higher for payments authenticated without SCA compared with payments authenticated with SCA.
But not everyone is convinced it’s been a total success. There are still concerns that SCA, although leading to a significant decrease in fraud cases, can cause inconvenience for users and may create a lack of financial inclusion for vulnerable and non-tech-savvy citizens.
At the same time, CMSPI reports from 2021 suggest a 26% average failure rate for SCA transactions. This was attributed to friction associated with two-factor authentication and difficulties faced by the industry in implementing solutions (timing and latency, differences in interpretation of rules, low levels of exemption usage, etc.).
Going forward, the use of SCA Exemptions and out-of-scope transactions in specific use cases is helping to cut failure rates. In addition, 3D Secure Authentication (2.0.) is also helping to reduce friction, especially for mobile users, where authentication can be made with face or fingerprint recognition.
Keeping up with regulations
Regulations and requirements are constantly changing – as new technology is introduced and new threats are exposed. But as the frequency of change accelerates, it can often be challenging for merchants to keep up.
It’s why when it comes to SCA, some are still lagging, either through lack of time or resources. Indeed, according to Barclaycard, just over a quarter (28%) of UK merchants are yet to implement SCA fully. And the results can be costing them dear. In the UK alone, it’s estimated that £2.07m in sales are being declined every day simply because transactions are being pushed through non-secure channels.
The right support can help merchants stay on track
As a payment acquirer, it’s part of our role at TrustPay to help domestic and cross-border merchants become and stay compliant. So they can spend more time running their business, selling products and services, and making customers happy. This includes SCA and 3DS2 transactions.
Ensuring compliance and safeguarding against fraud will remain a key priority for retailers as they move into 2023. But with the right help from an experienced acquirer, like TrustPay, they can be better prepared to respond to the challenges faster and with less cost and effort.