SCA has no initial impact on transactions: Barclaycard

Despite fears of widespread disruption to online retail, the recent deadline for the rollout of Strong Customer Authentication (SCA) has had no initial impact on sales, according to new data from Barclaycard.

The card and payments provider’s analysis of transaction data for 14 September - the implementation date for SCA rules - and the following day showed that merchants and shoppers had not seen an increase in abandoned transactions or declined payments.

SCA, which is being introduced across the EU as part of the second Payment Services Directive (PSD2) regulations, requires merchants to trigger two-factor security authentication for online transactions above £30.

The two-step security process is based on two or more elements categorised as: knowledge (something only the user knows such as the password); possession (something only the user possesses such as a key or fob); and, inherence (something the user is such as biometric information) that are independent to protect the confidentiality of payment data.

In the run up to the deadline for SCA implementation, several industry associations warned that retailers were not prepared for the new rules and raised concerns that added friction at the online checkout could lead to abandoned transactions and falling revenues for businesses.

In August, with a month to go until the deadline, the UK’s Financial Conduct Authority (FCA) agreed an 18-month extension for e-commerce retailers, card issuers, and payments firms, giving them more time to implement the two-step verification technology.

In June, the European Banking Authority (EBA) set out its view that more time was needed to implement SCA given the “complexity of the requirements, a lack of preparedness and the potential for a significant impact on consumers”.

While companies now have until 14 March 2020 to prepare for the changes, Barclaycard - which handles nearly half of the UK’s credit and debit card transactions - has launched Barclaycard Transact, a dynamic fraud protection solution aimed at helping businesses to comply with SCA and benefit from exemptions for low value transactions.

Barclaycard said the dynamic fraud protection solution enables businesses to benefit from SCA exemptions: low-risk transactions will continue to flow seamlessly, bypassing the two-factor authentication process.

Paul Adams, director of acquiring at Barclaycard Payment Solutions, said: “Our data offers encouraging news for merchants, whose transaction volumes have been, so far, unaffected by the go-live of SCA.

“Barclaycard’s unique position as issuer and an acquirer means that we understand the concerns that both merchants and consumers have about SCA, and the balance the regulation necessitates between customer experience and security.”

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