Online retailers have now been warned to be ready for the introduction of Strong Customer Authentication (SCA), the most significant change to the payments since Chip & Pin rolled out nearly 16 years ago.
Originally expected to be introduced on September 14, 2019, the rules and regulations that demand a 2-step authentication process for all online purchases over 30 Euros, came into effect on March 14.
In that context, the FCA promoted early enforcement by issuers in the whole of February, resulting in up to 75% of payment traffic getting a soft drop and being sent to 3DS (3d-Secure) for more validation checks.
Barclaycard Payments which processes £1 in every £3 spent on debit and credit cards in the United Kingdom, indicates that merchants risked losing out on £102m worth of sales in the past month.
Based on Barclay’s data, 43,000 transactions daily, worth £3.64m were declined at the point of sale in February. This data shows that last month, 1% of the shoppers noted an increase in their online payments being declined.
Moreover, 37% went to another retailer to complete their purchase, while the same proportion confirmed that they are unlikely to shop with a merchant in the future in case their payment is rejected without any explanation.
Adyen said that around 44% of businesses are ready for these new rules.
CEO of Barclaycard Payments, Rob Cameron, commented:
“Merchants who aren’t yet ready should start to prioritize becoming compliant to avoid losing out on sales. Our data has already shown the impact of not being prepared, and this will only get worse if steps are not taken now. The message to retailers is clear; if you don’t make buying online quick and easy for your customers they will simply go elsewhere.”
The director of Nuapay, Nick Raper, thinks that a shift to open banking payments will offer a way out of the mire for consumers and online merchants:
“The industry needs to stop talking about security and look to options already available such as open banking payments to ensure that the consumer impact is minimized and merchants are given the tools they need to remain compliant.”