The Retailer Winter edition_2020

What is a false decline? When a genuine customer with sufficient means to pay has their transaction declined – with no reason given.

Hidden Costs In addition to the risk of lost sales, the shift towards ecommerce and SCA comes at a cost. The most commonly-used tool to facilitate the 2-factor authentication required by SCA is 3D-Secure – an EMVCo product created to reduce fraud. Despite the European Banking Authority’s decision that 3D-Secure is not fully SCA-compliant and will require an authentication method in addition to One-Time Passcodes, it remains the chosen industry standard of handling SCA. With the use of 3D-Secure set to soar, Visa and Mastercard introduced a fixed per-transaction fee for using the authentication method in August 2019 – costing merchants an estimated €37 million a year. In 2020, Visa and Mastercard will also introduce a non-compliance fee for merchants that have not implemented 3D-Secure. The injustice of this is clear when we consider that 3D-Secure is not the only tool available on the market. Merchants can hope to minimise friction at the checkout by achieving exemptions from SCA. Although putting fewer customers through the SCA process can streamline the customer journey, 3D-Secure is still likely to be required to process the transaction – making it difficult for merchants to avoid the new fees. These charges come in addition to other fees keeping the cost of online transactions high – including rising scheme fees, high interchange caps, alternative payment methods, and the rate of returns and chargebacks seen in ecommerce. For merchants who are continuing to see their customers shift to online, staying on top of these additional costs will be essential.

“For every €100m of online spend during the Black Friday and Cyber Monday period, online merchants lost an average of €2m in revenue to false declines”

Conclusion The growing trend towards online shopping shows no signs of slowing down. The risk to both sales and costs should not be taken lightly. Merchants must assess every payment solution available on the market and consider a range of factors – including customer base, fraud profile, budget and technical requirements – in order to build a payments architecture that is fit for purpose. With the right payments solution, merchants can optimise approvals, minimise costs and build a comprehensive SCA exemption strategy – maximising the opportunity in ecommerce. The move from high street to online comes with multiple challenges, and merchants must ensure their payments arrangements are not neglected in order to remain competitive. By ensuring a seamless customer journey, retailers can boost revenue and secure long-term customers – whilst keeping costs low. For more information on the shift to online payments, as well as all of the challenges and opportunities that come with it, please get in touch via email ( rmacdiarmid@cmspi.com ) or phone (+441616416035).

Approval Rates by Channel

Approval rates are 97%+ for in-store transactions vs an industry average 85% for eCommerce In-store online 75% 95% 90% 85% 80% 100%

ROBBIE MACDIARMID //cmspi.com //rmacdiarmid@cmspi.com //+441616416035

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