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Retailers losing out on £4.3million in sales each day as new SCA rules block non-compliant online transactions

  • The cost to businesses who aren’t SCA compliant has risen since two-factor authentication in the UK became mandatory for online transactions on 14 March
  • Barclaycard Payments data shows 664,000 online transactions worth £130m in the UK were declined during the month since SCA became mandatory
  • Businesses can reduce basket abandonment and offer customers a faster, more secure check-out experience by becoming SCA compliant
  • Barclaycard research also shows two in five online businesses have not introduced any new payments technology to their website in the last two years
  • Sophisticated payments technology, such as Barclaycard Transact applies instant ID and fraud checks, speeding up shopping for millions of customers each year

Data from Barclaycard Payments, which processes £1 in every £3 spent on credit and debit cards in the UK, shows that many online businesses are still not fully compliant with the new Strong Customer Authentication (SCA) regulation – which became mandatory for all transactions one month ago today* – and have lost out on £130m** worth of sales as a result.

In the biggest change to payments regulation since the roll out of Chip & Pin in 2006, all online transactions over £25 are now subject to SCA checks to help combat the £376m of online fraud committed in the UK each year***. SCA adds a security check to all qualifying online transactions, prompting the cardholder to verify their identity through a one-time passcode sent by SMS, a response code generated from a bank-issued card reader or through approval via their mobile banking app. Cardholders then enter this code into the business’ SCA compliant checkout to complete the purchase.

These checks have led to a vast number of transactions being declined as many businesses have not sufficiently prepared themselves for the new regulation, with retailers missing out on millions of pounds in sales each day.

Barclaycard Payments data shows that over 22,000 transactions a day, worth £4.3m, have been declined in the month since SCA became mandatory.

Improving customer experience

New research by Barclaycard Payments, demonstrates the importance of using sophisticated payments processing technology to improve customer experience.

The data shows two in five online businesses (37 per cent) have not introduced any new payments technology on their website over the past two years. However, of those that have, 92 per cent agree that the technology they invested in has improved the checkout experience for their customers – one example being technology that can help reduce the number of SCA-related declines, with other benefits including in-depth analysis of where and when basket abandonment takes place****.

Businesses can comply with SCA without adding additional layers of friction to the checkout 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 existing payment gateways, enables e-tailers to reduce the risk of abandoned baskets, while also keeping consumers secure when shopping online.

Barclaycard Payments transaction data shows that over the past month, 93 per cent of transactions processed through the Barclaycard Transact platform were approved on the first attempt, compared to just 49 per cent of transactions going through less secure, non-SCA compliant channels*.

The solution, developed with customer security and experience at its core, allows online businesses 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: “One month on from the introduction of mandatory SCA checks, it’s clear that too many businesses are still not compliant and are losing out on millions of pounds in sales as a result.

“Our research shows that adopting new payments technologies can help businesses reduce basket abandonment while offering customers a faster, more secure check-out experience.

The message to retailers is clear; prioritise SCA compliance, simplify the customer journey and take advantage of the latest payments technologies to avoid losing out on sales and customers.”

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 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: Suraj Mashru at suraj.mashru@barclays.com or +44 (0) 207 116 8025 / +44 (0) 7385 510 014.

*The FCA and UK Finance developed a framework for SCA checks to be ramped up gradually, from March 14 2022, all online transactions over £25/€30 have been subjected to additional checks – exemptions can apply.

**Barclaycard Payments proprietary transaction data, taken between 14 March and 12 April 2022.

***UK Finance, 2020 data

****The research in this release was conducted by Opinium Research on behalf of Barclaycard with 400 decision makers at merchants who sell online. The nationally-representative research was conducted between 23 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.

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.