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June 26th 2020

SCA: Kicking Retailers While They’re Down

On 17th June 2020, the European Commission announced merchants will be granted no additional time to prepare for the Strong Customer Authentication (SCA) mandate across Europe, with the deadline remaining 31st December 2020.


At CMSPI, we estimate this could cost the European merchant community up to €90 billion in lost transactions for 2021 alone, due to SCA adding increased complexity at the checkout, at the end of an incredibly difficult year for retailers.

However, this potentially eye-watering financial loss isn’t the only issue putting European merchants in a difficult situation. Many merchants have seen an internal shift of focus to ensure they survive the disruption caused by the COVID-19 pandemic. As a result, this focus to survive has resulted in SCA preparations falling by the wayside.


With no pan-European delay to align with the UK’s new date, 14th September 2021, both merchants and the payments supply chain in Europe now only have six months to prepare or face losing out on significant revenue due to decline transactions. While the UK has extra time to address the issues the SCA deadline presents, Europe is likely to see suboptimal solutions being implemented – resulting in disruption, technical complexity and lost sales.

This could also cause a discrepancy between the interpretation of the regulations in the different regions, and with supply chains working on different timescales, merchants could see added complexity when it comes to intra-EEA trade between countries. By October next year, the solutions in Europe could already be deemed ‘legacy’ and not up to standard.

The extended deadline the UK is set to save €17 billion in disruption to the UK economy. Before the delay, the UK retail industry stood to see €24 billion in failed transactions, due to many merchants potentially not having an effective SCA strategy, with the extended deadline now only seeing an estimated €7 billion in failed transactions.

We’re offering free SCA impact assessments, in which we will provide estimates for what merchants could be set to lose with their current strategy, as well as essential next steps to begin optimisation. Contact our SCA experts today to discuss how to prepare for the upcoming mandate and mitigate against lost sales.

The Shift to Online

On top of the short deadline, the COVID-19 pandemic has ramped up the need for a well-executed SCA strategy with the shift to online. During the time when the majority of stores were closed due to lockdown measures, many retailers saw an exponential increase in online transactions – with some going from 90% in-store to being pure-play ecommerce merchants overnight.

With SCA affecting all electronic remote payments, the online space is now crucial for merchants to get right. Those that have just started to sell online now face an uphill battle to compete with the SCA solutions of more advanced merchants, who have had a more significant ecommerce presence and, as a result, more time to streamline their SCA strategies. We could see smaller merchants lose customers to larger merchants who naturally have more expendable resource to spend on their card and fraud strategies.

Whilst SCA reduces fraudulent transactions and improves merchants’ fraud and approval rates, it also adds additional steps and friction to the checkout, increasing dropout rates. As a result, retailers are expected to see lower conversion rates as there’s more chance for customers to close their browser, or even turn to a competitor that offers them a low-friction checkout experience via an improved SCA strategy.

An effective SCA strategy is mission critical for merchants and could be the difference between surviving and thriving in a post-COVID, post-SCA world. Despite this, many merchants many are relying on sending all transactions via 3D Secure, the payments industry’s chosen SCA-compliant product from EMVCo, as a blanket SCA strategy. While this may guarantee SCA compliance, it also guarantees excessive friction and a resulting reduction in sales.

It’s incredibly important for merchants to implement a proprietary exemption strategy in order to allow good customers to continue to transact as smoothly as they do today – after millions of euros in investment by merchants to make the checkout friction-free. If you don’t accelerate your SCA preparations now, you risk losing significant revenue.