Our Consultant Rohan Newton outlines the impact of the new Strong Customer Authentication law which comes into place on 14 September 2019
On the 14th September 2019, new requirements for authenticating online payments will be introduced as part of the second Payment Services Directive (PSD2).
SCA (Strong Customer Authentication) is a new law being introduced across Europe to protect customers from on-line fraud.
However, from a business perspective;
Experts say as many as 25 or 30% of transactions could be declined in the immediate aftermath of the switch to SCA.
Simply put, when you buy something online that costs over £30, you’ll need to additionally confirm your identity with a PIN (e.g 6 digit code to input), password or via biometric recognition on your SmartPhone, before making a card payment.
This is called 2-Factor Authentication.
Consumers may already have some experience of this during purchases, but this security protocol will now be extended to every transaction.
This will undoubtedly cause frustration for the customer, something vendors will have to deal with. If you take on-line card payments, expect an influx of calls when a purchase doesn’t go through.
But what else does this mean of your organisation?
After September 14, non-compliant transactions will simply be declined by the cardholder’s bank.
A shopper may have filled their on-line “basket”, but if authentication is not in place, they will not be able to complete the sale.
From a business perspective, the threat of a large drop off in on-line converted sales is tangible.
So here is a checklist:
- What type of two-factor authentication will you put in place?
- How will you test this prior to September 14?
- What’s your communications strategy to inform existing and future clients of the new process?
- Will your Contact Centre be prepared for an influx of calls when the new law is in place?
Transitioning to this new system will challenge small and large businesses alike. Ensuring compliance can be tricky at the best of times, but when an instant financial penalty appears wrapped in a bow of customer frustration…the pressure is on to deal with this oncoming storm.
Fraudsters will always look for a weakness. Once the on-line pay route has been secured, where will they go next? Will they focus on the call centres?
Please get in touch for an informal chat if I can help advise you with issues related to Card-payment fraud, either by email email@example.com or call 01355 900 000.
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