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October 02nd 2020

3 Days of 3D Secure – Day 3: India

For our final set of 3DS stats, I’m looking at the very interesting payment market of India.


Similar to China, India has seen a fantastic increase in 3DS success rates (87% vs 68%) compared to the same period last year, now with less than 1 in 6 transactions failing.

While the proportion of frictionless transactions has decreased (4% vs 6%), the average time to authenticate has actually decreased overall compared to 2019 (37s vs 41s).

One of the key reasons for this dramatic improvement in success rates is the fact that 2FA is effectively mandated on all online payment transactions. While, initially, this resulted in friction for customers and high abandonment rates (often the case study to argue against SCA in Europe), familiarity with online authentication is now beginning to show in the figures.

Q: What were abandonment rates when 2FA was first introduced?
A: Roughly 25% of transactions ended up with the customer abandoning the purchase initially…

…and this remained relatively consistent for a long time after 2FA was introduced. Interestingly, most consumers would subsequently not make that purchase at all, rather than shopping elsewhere, because the mandate was on all transactions and therefore the experience was consistent across merchants.

That’s also pretty close to what is happening in Europe with SCA today:

Will European customers be completely abandoning purchases too? It’s definitely possible, but exemptions make it much more likely that a customer reverts to a merchant that sells the same or similar goods, and that has a good exemption strategy in place (so they can avoid the additional friction).

Despite this year-on-year improvement in success, a recent announcement from the Reserve Bank of India (RBI) has made online payments – subscription-based ones in particular – more difficult, with merchants and their partners no longer able to store full card details for future usage.

This effectively means no more card-on-file transactions, or having to log into your Spotify/Netflix account every month to type in your card details again and again…

For any merchants operating subscription businesses in India, this is a worrying development that has disastrous implications for current business models.
In Summary…

It is clear that the past year has seen significant improvements in authentication across these key markets, yet there remains a large proportion of transactions that still fail. The crucial point is that, while many transactions will fail inevitably due to customer confusion or a technical failure, a subset of these failed transactions could have been successful with the right payments infrastructure and partners.

This subset that could have been saved can amount to millions of pounds, pesos, dollars or yen for large merchants, making optimising these transaction flows important to survival – especially as so many merchants rely on online channels post-pandemic.

This concludes our 3 Days of 3D Secure series, with our key message throughout being that:

  • online conversion is tough, but;
  • success rates are improving for leading merchants.

We are experts in ensuring that merchants’ customer can transact smoothly, using their preferred payment method, and at a cost that makes sense to the merchant. As an independent third-party with no affiliations to a particular solution or provider, we help merchants make the objective best choice for their business, cutting through the noise to highlight the real costs and benefits of each decision.

Get in contact today to discuss how we can help optimise your customer payments arrangements.