Strong Customer Authentication Has Got Businesses Worried

In a bid to reduce card payment fraud, Strong Customer Authentication (SCA) is being introduced on 14th September 2019 to act as a secondary proof of ID for customer purchases online, though in exceptional circumstances there is an 18-month extension period for implementation.

It will replace the current 3DS secure pop-up that often appears during an online purchase during checkout. The new authentication process requires two of three ID options to be verified at point of sale online for purchases over £30:

1. Password

2. Fingerprint/face recognition

3. Entering a code texted to your mobile

Whilst the introduction of SCA is welcomed, for some businesses who currently take recurring card payments, it has clearly got them rattled and many are considering alternative payment options (an estimated 25% unauthorised transactions are expected post introduction as seen in other parts of the world when launched).

The SCA process can be designed to be relatively smooth, however, it is an extra step in the process which often makes a customer think twice about a purchase in the first place, especially if there's a hiccup in the process. Businesses fear the additional element will lengthen the checkout process and undoubtedly this will reduce the overall payment success rate.

There is an added problem for variable card subscriptions. The card must be authenticated for the initial purchase, then further agreement is needed from the customer agreeing for their card to be charged in the future. Exemptions are possible by marking future payments as 'merchant-driven', however it will be the banks' decision whether authentication is needed from time-to-time which may require the customer to re-authenticate. Online customers like and expect single, fast and smooth processes, now!

Direct Debit is exempt from SCA completely as it is deemed 'merchant-driven'. For recurring payments this means the sign-up process is smoother and the reliability of payments being taken in the future will be unaffected by any authentication intervention.

Eazy Collect has seen an increase in enquiries from companies looking to switch from recurring card payments to the reliable process and collection of Direct Debit where online recurring purchases have long been proven as the norm. Over 4 billion Direct Debits are processed each year and are trusted by 9 out of 10 UK consumers.