In The Era Of SCA, Prioritize Customer Experience

1. In The Era Of SCA, Prioritize Customer Experience

2. The EU's Revised Payment Services Directive (PSD2) mandates strong customer authentication (SCA) to strengthen online payment security and boost consumer confidence. It mandates that issuers authenticate their clients using two-factor authentication during certain card-not-present transactions, which applies to the majority of such transactions. SCA offers you the chance to give your consumers a smoother, safer experience. As per the psd2 sca regulation, most card-not-present transactions are covered by SCA, which mandates that issuers authenticate their clients using two factors when making specific transactions. SCA does not cover certain card-not-present transactions. The primary sorts of out-of-scope transactions are: Transactions made through the mail-order/telephone-order (MOTO) channels are exempt. Transactions started by the merchant (MIT): Transactions with MIT, whether they involve fixed or variable payments, including subscriptions, are typically excluded. Only the first of several recurrent costs that the payer starts needs to have SCA applied. One-leg-out: The European Economic Area (EEA) does not apply to transactions in which either the issuer or the acquirer is located. SCA should continue to be used with "best efforts." What Does It Imply For Business Owners? Even though SCA is necessary for issuers, you can ensure that your customers get the best possible authentication experience. The payments sector is developing new procedures and technology to achieve this goal. However, you and your clients will only gain if you actively support these developments.

3. Developing Your Plan Do you have any business objectives? Are you taking advantage of SCA to provide customers with a smoother, more secure checkout experience? If the latter, you ought to think about implementing the most recent SCA- related advancements. Choose which option makes the most sense for your overall business goals: Do the bare minimum to prevent refused transactions after SCA has been applied? What 3-D Secure does (3DS): The primary authentication protocol used by the card payment industry is 3DS. Merchants should promote 3DS to help prevent any issuer decline following SCA. In contrast to past iterations of 3DS, this edition supports biometric verification and mobile-friendly authentication features. It also enables you to alert issuers when a payment is merchant-initiated or meets an exemption requirement, assisting them in avoiding unnecessary authentication problems. Taking advantage of SCA exemptions: A few exemptions from the rule—specific low-risk situations where SCA is not necessary—complement the requirement. Exemptions are designed to promote a simple checkout. You may decrease friction without raising the risk for your clients by using these exemptions—a win-win situation. Four Primary Exclusions Low-value transactions (less than €30): Up to five continuous transactions or an accumulated limit of €100, remote transactions under €30 are exempt from the SCA requirement.

4. Reputable listing: The issuer may be asked to forego SCA if the acquirer does real-time risk analysis on the transaction and determines the risk to be low. Issuers can omit SCA when their risk analysis justifies it. To learn more about your alternatives, speak with your acquirer. Low risk: Under specific circumstances, acquirers and issuers are permitted to conduct real-time risk analyses on transactions and request that the issuer foregoes SCA if they determine the risk to be low. Business cards: Payments conducted using certain corporate procedures and protocols undertaken by corporate entities, not accessible to consumers, and that already provide high levels of fraud protection may be exempt from SCA (examples are lodge cards, corporate travel accounts, and virtual cards). You can only ask for a relevant exception using the most recent 3DS protocol version available. Your system must be able to consistently determine when transactions are eligible for an exemption and then use the appropriate 3DS flags. This is known as exemption optimization. There isn't a universal authentication method. Your overall strategy and exemption requests will be based on the goals you have for your company, the nature of your industry, and the expectations of your clients. Best Practices For Fraud Management There's a reason why professionals advise multilevel, cross-channel fraud prevention measures and caution against placing undue reliance on any particular authentication or fraud screening solution. Although SCA is a valuable tool in the battle against fraud, it cannot replace a strategy that incorporates SCA with operational fraud screening because fraudsters are notorious for not giving up lightly. Your only defense for this out of and exempted transactions is to keep checking them for signs of fraud because SCA doesn't extend to all transactions. Scammers might pay more attention than ever to these transactions.

5. If your acquirer's cumulative fraud rate stays below a set threshold, they can only use the low-risk exemption. Additionally, businesses will still need to stay below scheme-specific fraud levels to use card schemes. Regardless of whether you are ultimately responsible for chargebacks, they will want you to contribute by having your own low fraud rates. Conclusion: Fraud Prevention Tactics Changing fraud patterns typically necessitate new approaches to fraud management as well as a change in focus. SCA will make fraudsters work harder, necessitating fraud teams to switch from "blunt" techniques and simple tools to a more complex and balanced approach. Businesses that wish to ensure the highest level of customer service, safety, and security while also ensuring that they are not suffering losses due to fraud, such as account takeover and e-commerce fraud, will find that fraud management software products are quite helpful.

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