When the U.K. left the European Union, it decided to retain some of the regulatory structure pertaining to payments. One of the facets it kept was a requirement to use Strong Customer Authentication (SCA) as a fraud prevention technology on all online transactions in excess of £25 ($30.60). In the U.K., the SCA requirement went into effect on March 14 and one of Britain’s largest financial institutions just released data showing its effectiveness.
According to early analysis by Nationwide Building Society (building societies in the U.K. are analogous to credit unions in the U.S.), the FI is seeing around 2,000 fewer cases of fraud on online transactions per month. And, in polling of its customers, 42 percent said they feel safer after seeing the two-factor authentication challenges. Two-thirds of those polled said they don’t mind transactions taking a bit longer in exchange for making them safer.
Europeans have long been more accepting than Americans of authentication challenges (e.g., 3DS) because they have been mandated in many of those markets. Retailers everywhere, however, are nervous that extra steps during e-commerce transactions will make consumers abandon more online transactions.
Matt Cox, chief product owner of digital payments at Nationwide, said: "Many people prefer the convenience of online shopping and, while merchants strive to make the checkout experience as quick and easy as possible, we generally accept that a small delay is worth it when it comes to our security and personal details."