Nationwide Building Society reports that the implementation of Strong Customer Authentication (SCA) rules in March has helped the institution prevent approximately 2,000 cases of online card fraud each month.
As the most significant update to UK payment regulations since the introduction of Chip & Pin in 2006, all online transactions exceeding £25 have been required to undergo two-factor authentication checks since March 14. This initiative aims to address the growing concerns around online fraud.
While SCA has faced criticism, particularly from retailers worried about potential customer abandonments during the checkout process, Nationwide’s research indicates that the regulations are proving effective. Despite some transactions taking slightly longer, a survey of 2,000 British consumers reveals that over two-thirds are willing to accept a minor delay for enhanced security. The majority of Nationwide members complete the SCA process using their mobile banking app, while 21% prefer to authenticate through a one-time passcode sent via text.
Matt Cox, chief product owner for digital payments at Nationwide, states, “Many people prefer the convenience of online shopping, and while merchants aim to make the checkout experience as quick as possible, we generally accept that a small delay is justified for the sake of our security and personal information.”
Initial data suggests that the rollout of SCA is positively impacting the reduction of online card fraud, with Nationwide noting around 2,000 fewer cases per month. Additionally, 42% of consumers feel safer shopping online due to SCA, and more than a quarter report an increased likelihood of shopping online thanks to the enhanced security.
Nevertheless, approximately 20% of individuals have encountered issues with the new system, primarily because not all merchants are compliant yet. Other challenges include customers lacking updated contact information to receive codes or not having their phones on hand to obtain them.
Recent research from Barclaycard Payments indicated that UK retailers have lost approximately £130 million in sales due to non-compliance with the new regulations.