Online retailers are being urged to prepare for the implementation of Strong Customer Authentication (SCA), marking the most significant shift in payment processes since the introduction of Chip & Pin 16 years ago.
Originally set to take effect on September 14, 2019, these regulations require a two-step verification process for all online purchases exceeding €30. The Financial Conduct Authority (FCA) encouraged early enforcement by issuers in February, which resulted in approximately 75% of payment traffic experiencing a soft decline and being redirected to 3D Secure for additional authentication checks.
Barclaycard Payments, which processes £1 in every £3 spent on credit and debit cards in the UK, reported that merchants risked losing as much as £102 million in sales during February. Barclays data indicates that 43,000 transactions daily, totaling £3.64 million, were declined at the point of sale that month. Notably, one percent of shoppers experienced an increase in online payment declines, while 37% opted to shop elsewhere to complete their purchases. Additionally, 37% expressed they are unlikely to return to a retailer if their payment is rejected without an explanation.
Notably, a survey by Adyen reveals that only 44% of businesses are adequately prepared for the new rules. Rob Cameron, CEO of Barclaycard Payments, emphasizes the urgency for merchants to prioritize compliance in order to avoid losing sales. He stated, “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.”
Nick Raper, director of Nuapay, advocates for a shift towards open banking payments as a solution for both consumers and online merchants, suggesting, “The industry needs to stop talking about security and explore existing options such as open banking payments to minimize consumer impact and provide merchants with the tools necessary for compliance.”