SCA Authorisation causes 73% fall in online retail fraud

The UK’s implementation of the pivotal Strong Customer Authentication (SCA) process has seen a seismic fall of 73% in online retail fraud. 

According to research from Barclaycard, retailers have experienced fraud decline on their online websites along with consumers too, as 80% state they welcome the longer checkout experience as long as it is a lot more secure and safe. 

Since its implementation in March, the new ruling on SCA in the UK was met with trepidation as longer customer checkout experiences may hinder the overall journey, causing friction and more basket abandons. 

However, 200 days removed from its initial launch, Barclaycard’s research suggests that the SCA authorisation has set out what it has aimed to achieve, as its two-factor authentication has helped “almost two thirds (63%)” of ecommerce firms build a positive impact on their business. 

Despite this downturn in fraudulent activity, Barclaycard reveals that one in three merchants (28%) are still yet to be fully compliant with the SCA authorisation, which has led to over £2.07m in sales being declined every day. 

Of those yet to fully implement two factor authentication, insufficient time and funds to implement the controls were cited as the biggest barriers to compliance. However, most businesses are planning to conform to the new rules within the next seven months, on average.

Kirsty Morris, Managing Director of Specialist Sales at Barclaycard Payments, said: “It’s reassuring to see how impactful the introduction of SCA has been in combatting the levels of online fraud in the UK.

“While most businesses have adapted well to the new levels of security, it does remain concerning that so many are still yet to become fully compliant. Our data shows that businesses risk losing millions in revenue by not upgrading their systems, so it’s important they look to make the shopping experience as safe and smooth as possible for their customers.”

In response to the SCA authorisation 40% of merchants report introducing new systems within the past two years to make the checkout process simpler. Of merchants recording lower rates of basket abandonment since the rules were introduced in March, 19% had communicated information about SCA to customers beforehand.  

Business owners are still looking to streamline their checkout experience however, with 53% already recognising that payments partners play a key role in helping their company adapt to new controls and regulations.

Barclaycard have offered their Barclaycard Transact product for merchants to utilise its AI-backed fraud checks to make “strategic SCA exemptions”, as ecommerce retailers can comply without risking increased basket abandonment due to added friction.  

Morris added: “By deploying sophisticated fraud checking solutions such as Barclaycard Transact, companies can ensure that both their ecommerce shops and their customers are better protected from fraudsters, while also reducing friction at the checkout.”