New European rules on Strong Customer Authentication (SCA) could block more than one-third of online purchases and cost merchants more than $100 billion in lost sales, according to an analyis by payments consultancy CMSPI.
The CMSPI report describes the technology as “relatively new and unproven”, adding “significant unnecessary friction to the online commerce experience.”
With the new security protocol adding between 60 seconds and two minutes to the checkout process, testing shows 25% of 3DS2 transactions are abandoned by consumers, compared with single-digit numbers without the technology.
Overall, as many as 35% of 3DS2 transactions fail to go through, either because they are declined, abandoned by frustrated consumers or because of technical errors. If not corrected, that would amount to €108.1 billion