With the UK finally set to officially enforce Strong Customer Authentication (SCA) rules, vendor Forter is warning merchants that issuing banks are already issuing soft declines on transactions which have not been sent to 3DS and are not flagged as either exempt or out of scope.
Initially scheduled for introduction on 14 September 2019, the rules - which demand a two-step verification process for all online purchases over EUR30 - will finally be introduced on 14 March.
However, Forter says that the FCA has promoted early enforcement by issuers without merchants being aware this is happening. As much as 75% of payment traffic is now receiving a soft decline from and being sent to 3DS (3d-Secure), if it's not flagged correctly.
Forter says that the 3DS friction can lead to failed transactions and abandoned shopping carts. The firm estimates that as much as 30% of transactions will fail 3DS or be abandoned, once PSD2 is fully enforced.
With SCA nearly here, separate analysis from CMSPI suggests that European merchants are already spending heavily on fraud detection and prevention - nearly €7 billion in 2021 alone, more than three times the value lost to fraud in the same year.
Throughout January, CMSPI estimates that merchants saw over 600 million chargebacks from sales made during the holiday season. Alongside an increase in absolute volumes, the types of fraud merchants face are rapidly shifting too, with threats such as refund fraud coming to the forefront for omnichannel retailers.