As many as half of UK consumers (49%) are likely to abandon future online and mobile purchases if faced with a multi-step authentication process – destined to happen in 18 months time when the UK implements the EU’s Second Payment Services Directive (PSD2)’s Secure Customer Authentication (SCA) rules in 2021.
Across Europe on 14 September 2019, PSD2 SCA came into effect, making it law for online retailers to double the authentication used to take online payments – a bit like Chip and PIN for online. While the UK’s Financial Conduct Authority (FCA) has delayed the UK implementation by 18 months, research by Forter finds that the proposed changes will put many off buying online, with only a third of UK consumers (34%) were aware of the incoming regulations which would impact authentication procedures.
According to the research, when faced with a multi-step authentication process on average around half of UK consumers (49%) are likely to abandon future purchases, highlighting the importance for merchants and PSPs to prepare ahead of the delayed 2021 deadline to avoid unnecessary purchase friction where possible.
Capturing reactions to current authentication methods, facial recognition is most likely to cause purchase rejection, with 6 in 10 consumers (60%) saying they would be likely to abandon their purchase if asked for this.
Fingerprint ID sees a similarly high level (54%) of likely purchase abandonment. Even the more well-known methods of authentication see at least two in five consumers reluctant to continue a purchase using those methods as part of a multi-step process: email sees 46% likely to reject a purchase, 3D Secure 45%, and SMS 44%.
Michael Reitblat, CEO and Co-Founder of Forter explains: “The UK was one of the first EU markets to confirm a formal delay of PSD2 enforcement. Irrespective of this 18-month delay, fraudsters will continue to capitalise on merchants’ weak spots. It is the responsibility of businesses to shore up defenses at all stages of the customer journey, and not only at the payment stage. Online merchants shouldn’t use this time as an excuse to hold off on compliance; instead they should work to improve their fraud prevention measures ahead of enforcement.”
Reitblat adds: “When speaking with consumers it is clear there has been a worrying lack of education about PSD2 and the need for greater security when completing online purchases. The focus moving forward should be on making the transaction as simple as possible, avoiding unnecessary multi-factor authentication.”