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UK merchants have been hit by the new strong customer authentication (SCA) rules block on non-compliant online transactions.
The cost to businesses that are not SCA compliant has risen since two-factor authentication in the UK became mandatory for online transactions on March 14, over a year after the similar rules became mandatory for the EU payments ecosystem, according to new research conducted by Barclaycard Payments.
Data from Barclaycard, which is both a card issuer and merchant acquirer and processes £1 in every £3 spent on credit and debit cards in the UK, reveals that many online businesses are still not fully compliant with SCA.
In total, 664,000 online transactions worth £130m in the UK were declined during the month since SCA became mandatory, averaging 4.3 m per day.
“One month on from the introduction of mandatory SCA checks,” said Rob Cameron, Barclaycard Payments chief in a statement, “it’s clear that too many businesses are still not compliant and are losing out on millions of pounds in sales as a result.”
In addition, the data shows that almost two in five online businesses (37 percent) have not introduced any new payments technology on their website over the past two years.
However, of those that have, 92 percent agree that the technology they invested in has improved the checkout experience for their customers.
For example, Barclaycard claims that technology can help reduce the number of SCA-related declines, while offering other benefits, such as in-depth analysis of where and when basket abandonment takes place.
SCA has come to represent a thorn in the side of the payments industry, with the rules being heralded by regulators as a method to tackle payments fraud, while critiqued by business and consumer organisations for being burdensome and even triggering financial exclusion.
On the day that compliance became mandatory, consumer interest group Which? cautioned that consumers without a mobile phone or reliable signal could be unable to make payments as banks are too reliant on mobile phones for carrying out the extra security checks.
In addition, rather than reducing fraud, there is a danger that new SCA rules could help open up new opportunities for fraudsters, according to Which?.
