Payments consultancy CMSPI believes the looming deadline in Europe for retailers to comply with the regulations around Strong Customer Authentication (SCA) for online sales could cause further damage to an industry already suffering from the effects of severely reduced in-store footfall.
Comparing it to ‘kicking them while they are down’ the consultancy claims the two-step verification process for purchases above €30 could cost European retailers up to €90bn in lost sales in 2021 alone. CMSPI says part of that loss will be caused by retailers rushing through ‘sub-optimal’ solutions just to achieve some form of compliance.
The deadline for the new SCA rules (part of the PSD2 regulations) has already been put back 15 months and will now come into force in Europe from December 31 this year. In the UK, the deadline for compliance has been further extended by nine months to September, but the Commission has ruled out any extension for the rest of Europe.
The SCA rules call for a verification process that combine two of three potential elements – that combine inherence, knowledge and possession - something the user is, knows or owns. Many retailers were planning to rely on sending one-time passcodes - to provide the knowledge element - to a user’s mobile phone that would provide the possession element. But the European Banking Authority has ruled that the one device – the mobile phone – cannot be used to satisfy two elements of the verification process.
Toby McFarlane of CMSPI says that the Commission’s refusal to further push back the European deadline is hugely disappointing news. He argues that European merchants now have a limited time to prepare and that:
“The knock-on effects of approval rates and therefore lost revenue is potentially staggering,”
CMSPI also says that the nine-month extension before implementation of SCA in the UK will ‘save’ UK retailers €17bn in lost revenues in 2021 with ‘only’ €7bn in failed transactions in the year.
Of course, our view is that it is not too late to implement an optimal solution – one that smooths and speeds online transactions and is also multi-channel so it can provide contactless in-store transactions with virtually no spending limit.
Our Onescan solution uses a mobile phone camera to initiate a secure transaction that fully complies with SCA rules. There’s also nothing that a customer has to download so there is no barrier to adoption.
To find out more, download our free guide on PSD2 and SCA to see how Onescan can help your business meet the new rules of doing business online or in-store.
Read more on CMSPI
SCA: Kicking Retailers While They’re Down
https://cmspi.com/eur/blogs/sca-kicking-retailers/