Only days away from the PSD2’s Sept. 14 deadline to implement Strong Customer Authentication (two-factor authentication), new research finds many travel industry officials are concerned about their readiness to comply with the new mandate. A new Amadeus report titled ‘Strong Customer Authentication in travel payments: Preparing for two-factor authentication’, released this week, finds only one in three travel merchants expect to be ready by the deadline.
The SCA mandate aims to tackle card-not-present fraud and make it much harder for someone to use a card number fraudulently to make an online purchase. The survey found 65 percent of airlines and agents expect SCA to negatively impact sales.
“The application of SCA in travel is more challenging than most other industries,” said Jean Christophe LaCour, head of Merchant Services and Payments at Amadeus, in response to the findings. “Moves by some local regulators to introduce grace periods offer the industry some flexibility, but travel merchants, PSPs and banks must now come together to embrace the new technology being made available.”
LaCour notes the additional checks, such as providing a one-time passcode sent to their mobile device, may increase abandonment rates by 10-20 percent. LaCour said another concern amongst the e-commerce community is the potential for cliff edge.
“Card issuers are responsible for applying SCA to a particular transaction, yet many other players including acquirers and merchants themselves must upgrade systems so they are capable of handling two-factor authentication. If that doesn’t happen, and an issuer therefore cannot request a traveler performs SCA, they may simply reject the payment.”
However, LaCour noted he anticipates increased abandonment rates and cliff edge impact to be relatively short-lived as many local regulators across Europe have introduced a grace period for SCA compliance.