Retailers must take action to counteract friction created by PSD2’s strong authentication requirements, warns Tryzens

PSD2’s Strong Customer Authentication rules designed to reduce fraud come into force in September 2019

PSD2’s Strong Customer Authentication (SCA) requirements, set to be rolled out next year, will do much to improve the security of online transactions and increase consumer trust in eCommerce. However, the additional friction SCA will create means that eCommerce retailers must take steps to streamline and optimise their payment processes to prevent the new stipulations impacting user experience, according to eCommerce specialist Tryzens.

PSD2 came into force in January 2018, bringing with it wide-reaching implications for all companies in Europe that deal with payments, ranging from how they regulate the emergence of Third Party Providers (TPPs) to how they enhance consumer protection. Implementation of the directive is still ongoing and rules around a key element of PSD2, SCA, which will require merchants to introduce two-factor authentication to transactions, were finalised earlier this year, with a final implementation date set for 14 September 2019.

When the SCA requirements are enforced, banks will start asking customers to take extra steps to prove their identity using additional authentication factors, which may rely on biometric methods or one-time codes generated for each transaction by the payment provider.

Commenting on the implications of the SCA requirement for retailers, Andy Burton, CEO of Tryzens, said: “Anything that helps to bolster security in eCommerce transactions should be welcomed and we know that fraud is a real concern for shoppers today. A recent study indicated that 68% of UK consumers believe that fraud when shopping online is ‘inevitable’, and that a third of shoppers had fallen victim to payment fraud over the last year alone. When we consider these figures, the enforcement of PSD2’s Strong Customer Authentication requirements can’t come soon enough.”

“However, there is a very real risk that it will create friction in transactions, and dent sales in the process, and while the security checks will sit with merchants, retailers must look closely at the possible impact on the customer experience during checkout to reduce friction and the frequency of abandoned baskets. The first and most obvious way to do this is try to incentivise regular shoppers to add them to their payment provider’s ‘white lists’ so that they can make they can make purchases without restriction. There are a numbert of ways that retailers can streamline payment processes and keep shoppers focused, from simplifying payment forms and shortening the checkout process as well as ensuring there are clear calls to action at every stage and progress bars” Mr Burton continued.

“The SCA stipulations are still a year down the line but it’s critical that retailers can get on the front foot and start optimising their sites and payment processes now so that they can keep the customer experience as seamless as possible when the requirements are introduced,” Mr Burton concluded.