Signifyd’s Ed Whitehead: Mapping the customer journey – how to reduce friction due to SCA


Ed Whitehead, the Managing EMEA Director for Signifyd, shares his insight on the impact SCA has had on the customer journey and if the added friction can be reduced. 

Strong Customer Authentication (SCA) was introduced with the aim to reduce ecommerce fraud. And while the two-factor authentication process is coming into force right on time with fraud attacks rife in the ecommerce landscape, it is also creating friction in the customer journey.

Unfortunately, higher cart abandonment rates and lost revenue are some of the negative consequences to the complicated SCA process. In order to evaluate the impact of the SCA regulations, the ecommerce fraud protection platform Signifyd has conducted a survey of 2,000 consumers in the UK, Italy, and France in collaboration with OnePoll, and presented the results in an ebook.

Today, we explore the impact of SCA on the customer journey and how merchants can improve the customer experience, reduce friction, and boost revenue.

Customers are in favour of fraud protection

Fraud is no fun for anyone and consumers are increasingly realising the benefits of a robust fraud solution. When they become victims to fraud, they suffer potential financial losses – an unnecessary hardship to deal with that can even affect the relationship with their favourite brand.

That’s why 39% and 34% of UK respondents “strongly” or “somewhat” agree that completing the additional SCA compliance steps are worth it to ensure they complete a transaction safely. In France and Italy the results are even higher.

Consumers are also concerned with personal data protection when shopping online. Some of the most common fraud attempts are made by using stolen customer data, such as identity theft or account takeover. SCA offers an extra step to data protection, and consumers are in favour of that. In fact, 52% of the UK respondents believe that SCA makes their data more secure, and 65% of French and Italian citizens do so too.

SCA leads to frustration with the checkout experience

But is it enough to have an understanding of the fraud protection benefits of SCA to equip consumers with the patience needed to complete the additional authentication steps without leading to cart abandonment?

It turns out that the multi-factor authentication process causes friction in the checkout process, leading to consumers feeling frustrated. As the checkout journey becomes longer, UK respondents experience frustration with the checkout experience. That leads to 36% of consumers failing to complete their transactions.

The result: cart abandonment and revenue losses

One of the most common ways this frustration manifests is card abandonment. 33% of online consumers have decided against shopping with a particular retailer due to friction in the checkout process.

Failed transactions due to cart abandonment or unsuccessful 3D-Secure (3DS) processing has increased significantly after the SCA enforcement in December 2020. Prior to that, the European average transaction failure rate was 28% in November and December 2020, and in January 2021 it reached 33%.

For businesses, failed transactions mean substantial revenue losses. Data from Barclaycard Payments shows that in the first month of the SCA enforcement in the UK, £130m worth of sales have been lost. That means that over 22,000 transactions worth £4.3m have been declined per day.

Challenging customers’ loyalty

In a world of rapid changes and increasing demands for a quick and efficient service, merchants who can’t keep up with that pace and provide a seamless customer experience don’t stand a high chance of retaining customers.

In fact, it takes UK consumers an average of 2.6 negative checkout experiences before deciding against shopping with a particular retailer again, and the story is similar in France and Italy.

Loyalty to smaller, independent retailers is hanging by a thread when it comes to friction in the checkout experience, as 68% of UK respondents say that they are “likely” and “very likely” to go to a bigger retailer if they had a bad experience with a small company. 

Bigger retailers and marketplaces such as Amazon and eBay offer a faster and more efficient checkout process, which is in line with consumers’ demands, along with a well-established reputation. 

Moreover, they are making use of robust solutions that help them provide a seamless checkout experience, such as Amazon Pay integration, and other fraud tools.

Improving the customer experience

In order to combat this issue and stay competitive in a very crowded market, SMEs and enterprises can take certain steps to minimise the negative impact of the multi-factor authentication process.

For example, they can partner with an issuing bank that uses 3D Secure 2.0 instead of the original and outdated 3D Secure 1.0. The new version is made for modern ecommerce and accommodates SCA’s requirements, as well as all exemptions it allows.

Exemptions are vital for reducing friction in the checkout process. Some of these include mail order or telephone order (MOTO) payments, merchant-initiated transactions (MITs), such as direct debits, and one-leg-out (OLO) transactions. There are other types of out-of-scope transactions you need to consider too. The understanding of this will help you manage SCA better and provide a seamless customer experience.

Luckily, you don’t have to do it all on your own. With the right fraud and exemptions management solution, you will be able to manage the complexities of SCA while minimising friction and encouraging more sales.

Offering a seamless customer experience is not an easy task. While you and other parties involved in the ecommerce world are looking for ways to reduce fraud, it’s important to keep up with the expectations for a more efficient and frictionless customer journey. That way you will secure yourself a loyal customer base and more incoming revenue.