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Retailers risk losing out on £3.64million in sales each day as SCA deadline approaches

  • The cost to businesses who aren’t compliant is set to rise as two-factor authentication becomes mandatory for online transactions from Monday 14 March
  • Strong Customer Authentication will help reduce online fraud, with cardholders required to verify purchases with a one-time passcode
  • Barclaycard Payments data shows 1.2m online transactions worth £102m were declined last month, which can be reduced by implementing sophisticated payments processing technology
  • Barclaycard Transact, used by retailers including The Range, applies instant ID and fraud checks, speeding up shopping for millions of customers each year

Barclaycard Payments, which processes £1 in every £3 spent on credit and debit cards in the UK, shows that merchants risked losing out on £102m worth of sales in February*, as two-factor authentication checks ramped up for online purchases ahead of Strong Customer Authentication (SCA) regulation becoming mandatory on 14 March.

A new in-depth study by Barclaycard Payments exploring readiness for SCA, demonstrates the importance of merchant compliance, from today, 100 per cent of transactions fall into scope for the new regulation, meaning merchants who remain uncompliant could see a significant fall in revenue.

The number of transactions subject to SCA checks has been gradually ramping up, this led to Barclaycard Payments seeing 43,000 transactions a day, worth £3.64m declined at the point of sale in February.

SCA, applying to online and app-based transactions, is designed to help combat the £376m of online fraud committed in the UK each year***. It requires all merchants to ask cardholders to verify their identity through a one-time passcode, provided by the card issuer. Cardholders then enter this code into the merchant’s SCA compliant checkout to complete the purchase****.

Improving customer experience

The data shows, that last month, 14 per cent of shoppers noticed an increase in their online payments being declined. Additionally, 37 per cent headed to another retailer to complete their purchase, while the same proportion said they’re unlikely to shop with a merchant in future if their payment gets rejected without explanation.

Merchants are able to comply with SCA without adding additional layers of friction to the check-out by deploying solutions such as Barclaycard Transact, which leverages an exemption in the regulation, owing to its highly sophisticated fraud checks. The payments technology, which can be added to an existing payment gateway, enables merchants to reduce the risk of abandoned baskets, while also while keeping consumers secure when shopping online.

Barclaycard Payments transaction data shows that in February, 93 per cent of transactions which were processed through the Barclaycard Transact platform were approved on the first attempt, compared to just 69 per cent of transactions going through less secure channels.

The solution, developed with customer security and experience at its core, allows merchants to provide a simpler and quicker checkout process, which in turn is likely to increase consumer loyalty and boost sales.

Rob Cameron, CEO of Barclaycard Payments, said: “The introduction of mandatory SCA is the most significant payments milestone since the rollout of Chip & Pin more than 16 years ago. While the new regulation is a positive step to keep customers’ data safe online, our research shows that shoppers are inclined to abandon transactions if it takes too long to check-out, demonstrating how important it is for businesses to have sophisticated fraud checks in place.

“Merchants who aren’t yet ready should start to prioritise becoming compliant to avoid losing out on sales. Our data has already shown the impact of not being prepared, and this will only get worse if steps are not taken now. The message to retailers is clear; if you don’t make buying online quick and easy for your customers they will simply go elsewhere.”

George de Heer, Head of Development of The Range – a retail business that is rapidly expanding its ecommerce offering – added: “We sell more than 90,000 different products through our digital channels and strive to ensure that every online transaction is smooth, secure and seamless.

“The full SCA rollout makes that more of a challenge. With the support of Barclaycard Payments, we’re using Barclaycard Transact to reduce the friction that SCA creates, and even harness machine learning capabilities to better detect incidents of fraud. Our goal is to make the checkout process as easy and safe as possible. Barclaycard Payments’ data reflects our own findings, that a complex, or lengthy checkout process leads to consumers dropping out, and this can have a sizable financial impact to any organisation.”

To help its hundreds of thousands of merchants comply with the new regulations, Barclaycard Payments has been hosting regular webinars on SCA, focusing on the steps businesses can take ahead of the deadline, to protect their online revenue streams. 

To find out more about how Barclaycard Payments can help your business to prepare for SCA, visit https://www.barclaycard.co.uk/business/business-matters/fraud-and-security

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Notes to editors

For more information, please contact the MHP Barclaycard Payments team on mhppaymentspressoffice@mhpc.com   

*Barclaycard Payments proprietary transaction data, taken between 1 February and 28 February 2022.

***Barclays offers four verification methods for cardholders: a one-time passcode sent via SMS, approval of a transaction via the Barclays/Barclaycard mobile app, generation of a one-time passcode via the Barclays Mobile PINsentry feature, available on the Barclays/Barclaycard mobile app, or a one-time passcode via a physical card reader device.

****UK Finance, 2020 data

More about SCA: https://www.barclaycard.co.uk/personal/help/fraud-security/whats-sca

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit. In the UK we process nearly £1 in every £3 spent using credit and debit cards, and in 2021 we processed over £270bn in transactions globally. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.