The online payments and retail industries have been abuzz with news of PSD2 regulations and what they will mean for the broader e-commerce industry - ultimately impacting how payment providers and merchants alike do business across the UK and Europe.
The latest news confirms a delay to the implementation of Strong Customer Authentication (SCA) in the UK. SCA intends to better protect online customer data and to reduce online transactional fraud by requiring additional authentication methods from merchant customers in the European Economic Area (EEA). SCA requirements are slated to go into effect 14 September 2019, however implementation and subsequent enforcement of these requirements are likely to vary among countries and markets.
Added Authentication Requirements, Added Friction
For many retailers, the biggest concern they have as SCA implementation draws closer, is how it may impact their customers’ shopping experience. The SCA requirements are a form of multi-factor authentication - a positive addition from a security perspective - but are likely to negatively impact customer experience. Forter research indicates that half of American shoppers agree they’re less likely to buy something online if the entire checkout process takes longer than 30 seconds.
As SCA will inherently necessitate increased customer information requests, retailers’ concerns are not unfounded. However, if partnered with a fraud prevention solution that is able to dynamically route only the transactions that require this additional authentication, merchants can still maximize their customers’ experience and conversions alongside full PSD2 compliance.
“Fraud is a constant concern, and we can’t afford to take risks,” said Juraj Striezenec, CFO at Kiwi.com. “We knew we wanted to work with the best fraud-prevention partner available, and Forter’s suite of capabilities has been a game-changer for us. Knowing we can meet the requirements of PSD2, while also mitigating the friction introduced by SCA requirements, means we can focus on our core business objectives and drive overall engagement with consumers.”
A Fully Automated, Integrated Fraud Platform
As the SCA implementation deadline for merchants creeps closer, all businesses must ensure they have a proper PSD2 strategy in place now. By partnering with a fully automated and integrated fraud platform, merchants can rest assured that their business needs and PSD2 requirements will be met.
By leveraging an integrated platform, Forter’s fraud prevention solution gives merchants the ability to work within a system and framework that is interconnected and sees data holistically. In many cases, online merchants leverage multiple tools to solve a variety of problems. They may use one vendor’s tool for their chargeback issue, one vendor’s tool to help defend against bot attacks, and an additional vendor’s tool to implement rules or manual review teams to go through their transactions. While all of these tools may be useful and well intended, the fact that they exist in separate siloes creates enormous gaps in capturing accurate views of the entire merchant platform, and therefore merchants will miss many facets of information that could be vital to eliciting more accurate results. These gaps in knowledge could lead to diminished customer conversions and could similarly impact customer experience and lifetime value (LTV), if good customers feel friction, are being declined, or are blocked from transacting.
Forter’s approach to fraud prevention is to close the gaps caused by these fractured efforts. From Day 1, Forter looks at 100% of merchant transactions, and 100% of the customer journey. This means Forter not only sees transactional data points, but also has a wealth of knowledge about consumer behaviors and interactions prior to the point of checkout. By connecting the dots between initial customer actions at sign-up or log-in, all the way through to leveraging coupon codes or loyalty reward points, Forter is able to more accurately make trust decisions at every stage in the customer lifecycle while limiting friction.
Forter’s Dynamic Authentication for PSD2 Compliance
Forter's PSD2 solution enables merchants to automatically evaluate the risk of each transaction and route it through the path of least possible friction. The platform provides real-time fraud prevention decisions, adaptive authentication to streamline the entire checkout flow, and SCA using 3-D Secure (when necessary).
Forter’s solution is unique in the market, as it is the only fully automated offering powered by machine learning and predictive fraud expertise, backed by an immense breadth of knowledge as a by-product of Forter’s Global Trust Network.
Visit Forter’s PSD2 solution page for more information about how we can your business maximize conversions while ensuring full PSD2 compliance.