Early SCA enforcement impacting ecommerce sales

The new SCA (Strong Customer Authentication) laws set for implementation on 14 March have been enforced earlier than expected by the Financial Conduct Authority (FCA).

The FCA has already issued banks, without merchants being aware. Prompting Issuers to issue soft declines on transactions which have not been sent to 3DS and are not correctly flagged as either exempt or out of scope.

Around 75% of payment traffic is now receiving a soft decline from the Issuer and being sent to 3DS if it is not flagged correctly, according to Tamebay.

It is likely that this figure will will only increase as the enforcement deadline approaches.

Strong Customer Authentication
READ MORE: How the new SCA regulations could affect your business

From 14 March and onwards, PSD2 regulations require 100% of transactions that are not flagged as exempt or out of scope must be declined and sent to 3DS.

3DS friction can lead to failed transactions and abandoned shopping carts.

Software company Forter estimates that as much as 30% of transactions will fail 3DS or be abandoned, once PSD2 is comes into full force.

How this could affect merchants

As more and more transactions are at risk of of being soft declined and sent to 3DS, merchants revenue is likely to be impacted, if inappropriately flagged as an exemption or out of scope.

With more than half of transactions currently vulnerable to 3DS friction, merchants are already feeling the pinch.

Forter has already helped clients respond to the increasing friction rates by improving their authentication rates for non-3DS transactions by up to 10% in some cases.

How merchants should act

If merchants have yet to deploy PSD2 measures they should before the 14 March as it has been enforced early by the FCA in some cases.

Flagging exemptions rather than sending nothing to 3DS dramatically increases the authentication rate of the non-3DS transactions.

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