The FCA announced in May that the deadline for SCA compliance has been pushed back to March 2022. Galit Michel, VP of Payments at Forter tells Douglas Blakey about the impact of the extension on UK merchants and how they can learn from their European counterparts

Due to a lack of readiness and the long-term impacts of the pandemic on UK merchants, the deadline for SCA compliance is now March 2022. That at least does give UK merchants the opportunity to assess what European merchants have learned post-PSD2.

Moreover, this delay presents opportunity for UK merchants. While many players in the payments ecosystem flag up the challenges that PSD2 presents – adapting the payment process means significant changes on the merchant’s side – there is an enticing opportunity.

Specifically, there is a need to ensure that SCA enforcement is not a drill. Unprepared merchants will suffer the consequences. But according to Galit Michel, merchants that prepare early and optimise their PSD2 solution will be among the winners.

In particular, there is a need to partner with the right payment optimisation solution. If lessons can be learned from European neighbours, UK merchants will be able to continue generating revenue and profit.  And crucially, being fully PSD2 compliant.

FCA: expect no further extensions

This further 6-month extension, to ensure minimal disruption to merchants and consumers recognises ongoing challenges facing the industry to be ready by the previous 14 September 2021 deadline. But the FCA says that the new 14 March 2022 deadline is the latest it expects full SCA compliance for e-commerce transactions.

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The previous deadline of 14 September 2021 replaced a target date of 14 March 2021. In other words, the message from the FCA is to expect no further extension.

Supporting 3DSecure technology

So the industry has had ample warning. There remains a need to ensure that consumers are fully up to speed. That SCA is to be welcomed. It is simply a new set of rules that will change how consumers confirm their identity when making purchases online.

If merchants do not take appropriate action, e-commerce card-based payment transactions that are non-compliant will be declined. Implementation of the new rules will require testing and specific changes to the payment process. Specifically, merchants must upgrade their payments process to support 3DSecure technology.

This technology is also required in order to facilitate the use of SCA exemptions and enable SCA when needed. Visa, Mastercard and American Express have all set up respective issuer and acquirer mandates for the three different 3DSecure versions.

Greater security will mean added friction

For retailers, the concern will be that greater security via SCA will mean a negative impact on the customer experience. SCA is after all, a form of multi-factor authentication.

Forter research from the US finds that half of Americans are less likely to buy online if the checkout process takes longer than half a minute. The average US customer will wait just 10 seconds for their credit card to be verified. Indeed, one in three US consumers have clicked out of purchasing an item when having to re-enter their credit card information.

In an age of instant gratification, consumers will abandon their shopping cart if the user experience is overly clunky.

In short, retailers must be able to confirm the trustworthiness of a consumer without having them jump over multiple hurdles.

Forter’s PSD2 solution

Galit Michel stresses the need for retailers to partner with a fraud prevention solution that is able to dynamically route only the transactions that require additional authentication. That way, merchants can still maximise their customers’ experience and conversions while complying with PSD2.

Forter’s PSD2 solution enables merchants automatically to evaluate the risk of each transaction. It is then routed through the path of least possible friction. The platform provides real-time fraud prevention decisions, adaptive authentication to streamline the entire checkout flow, and SCA using 3-D Secure (when necessary).

At the time of the launch of the solution, Michael Reitblat, CEO and Co-Founder of Forter told RBI how it will transform fraud prevention.

“At Forter, we have expanded our solution to cover any type of interaction between the digital buyer and the retailer. One of the biggest damages of online fraud is actually turning away a lot of good customers. What Forter is doing is replacing and removing that complexity away from retailers and offering them a simple solution that reviews all online transactions regardless of how they are made.

“We make real-time decisions on whether to approve a transaction or not and, if necessary, assume the liability for any type of fraud that comes through that.”

SCA delay offers UK merchants a window of opportunity

Michel adds: “My message to UK merchants is to take the delay as an opportunity. Get ready and make sure you know what you are doing and know what your strategy is.”

She adds that the UK market needs to learn important practical lessons from Europe.

“It is important for UK merchants to apply the appropriate fraud solution. In Europe, applying 3DS on all transactions as some have done is a very big mistake. In some markets this has resulted in 30% of all transactions being lost. So it really is important to apply the PSD2 exemptions but overall I am optimistic the UK can get it right.”