However, there are multiple ways how to comply with the regulation and keep the sustainability of the conversion or even improve it. For a transaction to be compliant and successful, the issuer and acquirer domain both need:
- to enable SCA and
- apply the EMV® 3DS2 protocol
Due to the mandated adoption of 3DS2, UK issuers have seen an increase in 3DS2 transactions on their platform. This is adding challenges when it comes to response times, scalability and stability.
The data up until November 2021 shows that UK challenge success rates are not much better than the EU average. The difference is that UK issuers have a much lower challenge rate of 5-15%. And a lower challenge rate translates into a higher overall authentication success rate.
The data on Netcetera’s platform is in line with the schemes reporting an increasing number of 3DS2 transactions, which will only increase more with the UK going live. On average, around 82% of all transactions are approved within the 3DS process.
Challenges and solutions to improve conversion
The biggest challenge for issuers and merchants related to PSD2 SCA in the checkout process is the issues with the challenge flow, e.g. abandonments, as well as an understanding of the new regulations and processes. Card/customer enrollment problems, issues with proper exemptions handling and compatibility, and technical issues come right after this. The acceptance rate in the authorization approval rate in the EEA (European Economic Area) – where PSD2 is mandated – is 85,5%. Outside this area, it is slightly higher with 89%.
The majority of large UK issuers are ready to accept the new challenge, which makes it clear how critical proper authentication is for the successful checkout process. Card issuers can take action in several places to improve conversion.
- In particular, by making the onboarding process for strong customer authentication as user-friendly as possible. It is also helpful to consistently take advantage of exemptions to minimize the need for cardholders to confront strong customer authentication. In addition, offering whitelisting can be a relatively simple way to significantly increase conversion.
- Decreasing the false declines with the implementation of a risk-based assessment tool is one more way to go. 3DS2 helps in that matter with the increased number of data points shared between merchant and issuer (10-times more). The implementation of 3DS2 requires merchants and card issuers to exchange more data, which will result in better fraud assessments and a reduction in the rate of false declines.
- Incorporating the right monitoring and reporting to identify any areas of improvement and track overall performance will be a must, too. Providers, such as Netcetera, experienced in the 3DS ACS domain, can help with specializations in new areas and easier adaption to changing regulations.