The FCA (Financial Conduct Authority) announced today that they have extended their deadline for implementing Strong Customer Authentication (SCA) for ecommerce transactions to 14th of March 2022. This further 6-month extension to SCA compliance is intended to ensure minimal disruption to merchants and consumers, and recognises ongoing challenges facing the industry to be ready by the previous 14th of September 2021 deadline.
The new 14 March 2022 deadline is the latest the FCA expect full SCA compliance for ecommerce transactions.
Frankly, the implementation of SCA compliance on the continent has seen a drop in conversion rates which no one can really welcome. It’s devastating for merchants and even for consumers, if you’re trying to click the buy button and it’s too onerous to complete your transaction you’re probably not a disgruntled customer that might not return.
“PSD2 has already come into force across Europe’s major ecommerce marketplaces, and the negative impact on conversion rates has been significant. For example, ecommerce merchants in France and Spain have experienced on average a 25% reduction in conversion rates, a 30% reduction in Germany, and up to 40% of transactions are being lost in Italy, costing merchants millions of Euros per month. Many of these transactions can be exempted or excluded from the scope of PSD2; Forter has been able to restore approval rates for several large merchants to a level very close to their pre-enforcement baseline, but this involves sophisticated technical solutions that not all merchants can take advantage of.
Across the board, merchants are struggling to manage the significant changes to their payments process, and we have observed a lack of issuer readiness, as well as low levels of customer co-operation with the increase in friction at the checkout. The desired impact of PSD2 was to reduce levels of fraud, but in reality, the outcome has been to frustrate customers and deprive merchants of much-needed revenue.
We are not surprised that the FCA has taken this bold move to push back the UK enforcement date by another 6 months, and will be welcomed as it gives merchants more time to observe and learn from the impact across Europe, and to ensure that they have an optimised solution in place to reduce friction and maximise approvals before the new enforcement date. However, we do believe that PSD2 will eventually be enforced in the UK, as it has already been transcribed into UK law, and we are already seeing transactions being declined when they are sent for processing without 3DS, so merchants should consider this a welcome extension and not a complete reprieve.”
– Galit Michel, VP of Payments, Forter
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