When Strong Customer Authentication (SCA) regulations were introduced, the goal was clear: to reduce fraud in e-commerce. But two-factor authentication has also created significant friction in the customer journey.
Agents are trying to navigate the new regulations and make the process easier, but there are gaps in customers’ awareness of the new regulations in place. Lack of information causes customers to permanently abandon shopping carts or merchants, which affects merchants’ revenue.
In order to assess consumers’ awareness and attitudes towards SCA, e-commerce fraud protection platform Signifyd conducted a survey of 2,000 consumers in the UK, Italy and France in collaboration with OnePoll and presented the results in an e-book.
Let’s explore why customers know Regulation of the Securities and Commodities Authority and what traders can do to mitigate these issues.
How does SCA affect customers?
Due to increased fraud pressures in the wake of the boom in e-commerce sales, new payment regulations have been implemented in Europe and the UK. Payment Services Directive 2 (PSD2) enforces Strong Client Authentication (SCA). Its goal is to ensure the legality of online orders, maintain customer confidence in online purchases, and grow the e-commerce economy.
Customers are required to complete two-factor authentication during the online checkout process to verify their identity.
They must choose two out of three independent authentication factors, including:
- Something the customer knows (eg password, PIN, secret answer)
- Something the customer owns (for example, a mobile phone or a token used for purchase)
- Something is the client (eg, fingertip, speech recognition, facial recognition)
All e-commerce transactions within the European Economic Area are regulated by the Securities and Commodities Authority.
Are consumers aware of SCA?
Regardless of the new changes that come with full implementation in Europe and the UK, consumers are not sufficiently aware of SCA.
A customer awareness survey conducted by Signifyd found that more than half (53%) of respondents in the UK are aware of SCA; And in Italy and France, this was less than a third of respondents.
As expected, younger populations are more aware of downtime than older age groups; And those between the ages of 25 and 34 are most aware of the changes in the three countries. In contrast to France and Italy, the UK does not see significant variation in awareness across age groups.
Who is responsible for customers not knowing the Securities and Commodities Authority?
It is the responsibility of the bank/card issuer to inform customers of the new arrangements. However, 47% of the survey participants did not receive this information.
Once the communication is sent, clients should also take the time to familiarize themselves with the new process. However, 16% of UK respondents given information about the SCA had not read it. In Italy and France, respondents tend to ignore SCA connections more than in the UK.
Perhaps banks/issuers could work with merchants to suggest better ways of communicating about payment changes to raise awareness.
In addition, merchants can also post information about upcoming changes and use their websites and social media to highlight the new authentication process. This way, they instill more confidence in the process and ensure more completed transactions.
What causes clients to not know about the Securities and Commodities Authority?
In today’s e-commerce landscape, customers are looking for speed and efficiency in their shopping experience. A bad review or using the wrong font can cause merchants to lose customers. In fact, 80% of orders are made on mobile devices In the second quarter of 2022 in the UK is not completed. Retrospectively, 74% of applications placed on tablets and 72% on computers were also incomplete.
With cart abandonment rates so high, friction in the checkout process can be detrimental to purchases, especially when customers aren’t aware of the SCA and its fraud prevention benefits. Signifyd’s survey shows that 33% of respondents in the UK decided not to shop with a particular retailer after they were asked to complete additional verification steps.
Attrition in the checkout process can cause customers to lose loyalty altogether, with UK respondents saying it takes 2.6 bad shopping experiences before they decide to never shop with a particular retailer again. Finally, 68% of online shoppers in the UK are “likely” or “very likely” to go to a larger retailer if they had a bad experience with a small business.
The new SCA regulations provide a framework for better protection against fraud in e-commerce. As merchants navigate the new process, step up their customer retention game, and even rethink the checkout experience, some online shoppers are sitting in the dark about the changes.
By partnering with banks/card issuers, merchants can raise awareness about the SCA and its benefits in order to reduce card disruption and increase revenue.
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