With the UK set to officially implement Strong Customer Authentication (SCA) rules, vendor Forter is alerting merchants that issuing banks are already applying soft declines on transactions not processed through 3DS and unmarked as exempt or out of scope.
Originally scheduled for introduction on 14 September 2019, the rules require a two-step verification process for all online purchases over €30 and will take effect on 14 March. However, Forter has indicated that the Financial Conduct Authority (FCA) has encouraged issuers to enforce these rules early, often without merchants’ awareness. Currently, approximately 75% of payment traffic is encountering soft declines and being directed to 3DS if not correctly flagged.
Forter warns that the friction introduced by 3DS can result in failed transactions and abandoned shopping carts, estimating that once PSD2 is fully enforced, up to 30% of transactions may either fail to complete 3DS verification or be abandoned altogether.
As the SCA deadline nears, separate analysis from CMSPI reveals that European merchants have already been heavily investing in fraud detection and prevention, spending nearly €7 billion in 2021—significantly more than the total value lost to fraud that year.
Throughout January, CMSPI estimates that merchants experienced over 600 million chargebacks from holiday season sales. Moreover, the nature of fraud is rapidly evolving, with new threats, such as refund fraud, becoming increasingly prominent for omnichannel retailers.