Further Identity Checks Placed on UK Shoppers | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 14/03/2022

Strong Customer Authentication regulation will now require online shoppers to verify themselves before paying at the checkout after £376 million was lost to online fraud in 2020.

Strong Customer Authentication (SCA), which has been endorsed by the Financial Conduct Authority (FCA) and UK Finance, will be in place from today. These regulations have been enforced as an attempt to reduce the £376 million lost in online fraud in 2020, according to Barclaycard.

SCA will now require UK online shoppers to prove their identity by fulfilling two of the three requirements: providing something they possess, such as a mobile number or email, providing something they are, such as a fingerprint or face ID, or something they know, such as a pin or passcode.  

Some transactions, which are deemed low-risk, will be exempt from these protocols. These include subscriptions and low-value purchases. 

“This measure will go a long way to prevent unauthorised fraud, which caused £261.7 million of losses in the first half of last year for online card transactions,” said Robin Bwalya, Manager of Payments Policy at UK Finance, in a blog post.

Despite slowly implementing SCA in February this year, research from Barclaycard found that 1.2 million online transactions worth over £100 million were declined in this month alone.

“The introduction of mandatory SCA is the most significant payments milestone since the rollout of Chip & Pin more than 16 years ago,” Rob Cameron, CEO of Barclaycard Payments, claimed.

“Merchants who aren’t yet ready should start to prioritise becoming compliant to avoid losing out on sales,” he said.

What does this mean for my business?

If your business’s online payments section is not SCA-compliant, then it is likely that your customers will shop elsewhere, warned Cameron.

Ultimately, neglecting SCA regulations on your website will put your customers at a higher risk of their banking provider rejecting their payments. This will lead to more frustrated customers who will turn to easier online transactions elsewhere.

In fact, Barclaycard research found that three in 10 shoppers will abandon their carts if there is friction on a website’s checkout page. In addition, 37% opted to complete their transaction elsewhere, while the same proportion said they’re unlikely to shop with a merchant in future if their payment gets rejected without explanation.

Businesses will also benefit from a shift in liability in fraud, Bwalya indicated.

“SCA will help reduce a business’s fraud loss, and it will shift the liability for fraud from the retailer to the payment provider,” he said.

More tips on how to start your business in 2022 can be found in our guide.

How will this affect my online shopping?

Online shoppers need to be aware that the SCA takes place with their banking provider and not the merchant.

Therefore, shoppers should contact their banking providers and inform them of any change in personal details.

“This protection is an important part of keeping people safe from fraud, so it’s vital that you make sure your contact details are up to date with your bank so that SCA works properly for you,” stated Bwalya.

Still, some shoppers are finding the SCA frustrating thus far. Of the shoppers it surveyed, 28% cancelled their purchase because SCA checks “took too long to complete” according to Barclaycard.

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