Any business in Ireland that sells products or services online needs to upgrade its payments system to be ready for a new regulation called Strong Customer Authentication (SCA) from July 1.
The aim of SCA is to reduce fraud by adding an extra layer of security to online payments to make sure that a payment is coming from the authorised cardholder.
However, new research from Visa shows that many businesses still aren't prepared.
What do businesses need to implement?
To get ready for this new regulation, e-commerce businesses will need to add a form of technology called 3D Secure to their online checkout.
Dominic White, Acting Country Manager Ireland, Visa explained that the technology scans payments as they come through, to determine if they seem likely to be fraudulent.
"It enables banks to verify the authenticity of the customer by asking them for more proof of their identity," Mr White said.
Mr White said at Visa, they believe the best way to make sure customers’ payments support the regulation is to add the latest version of this technology - EMV 3D Secure.
"This version gives banks more information on a payment, so they can be sure it’s the customer and not a fraudster – and is more suited for use on mobile phones and other smart devices," he explained.
How do businesses set up this new payments system?
Despite all the technical terms, Mr White said getting SCA-ready is pretty straightforward.
He said the first thing a business should do is contact their business bank or the company that provides their online checkout service and ask them to 'switch on' 3D Secure or the optimised version, EMV 3D Secure, to support the regulation.
"For a better customer experience, businesses can work with their bank to help identify certain types of payments that might be exempt from SCA and, therefore, may not need customers to take additional steps before a payment is authorised – for example, some low-value payments," he said.
What will happen if businesses don’t make these changes?
Many businesses in Ireland have already taken the necessary steps to implement the technology needed to support SCA.
However, for those that have not, consumers may experience disruption, as Mr White explained.
"If an online site is not set up for SCA, customers’ banks may decline purchases over a certain amount, risking abandoned purchases at the checkout," he said.
He said this could result in a bad shopping experience for the customer if they can’t go ahead with their purchase.
"It could result in lost sales, which is bad news, particularly for small, independent businesses," he said.
Are businesses in Ireland prepared for these changes?
Research carried out by Visa shows that the uptake of the required technology among large e-commerce businesses in Ireland has increased at pace since December.
"Today, more than three quarters of large e-commerce businesses in Ireland have implemented some form of the technology required, (3D Secure), and 65% are equipped with the best version of this technology – EMV 3D Secure," said Mr White.
While that is an increase in uptake of 15% and 26% respectively since December, it shows that there is a significant number of businesses that are still not SCA-ready.
Mr White said they want to remind small, independent businesses that may not be aware of the new regulation to get in touch with their bank or payment provider so they don’t get left behind.
Will consumers notice any difference once this new service is in place?
For most online purchases over a certain amount, consumers will be asked to confirm that they are the cardholder by verifying their identity.
Many consumers may have already noticed that when shopping online they are now asked for extra identification, as more and more businesses get ready for SCA.
SCA uses two factor authentication, as Mr White explained."It is a secure, digital way to confirm that the authorised user is the person using the card online.
"The cardholder will be asked for two pieces of information to verify their identity such as something they know, like a password; something they have, such as a phone or card reader, or something related to who they are, like face recognition or a fingerprint," he explained.
Do consumers need to take any action with their banks?
Customers will have received communication about the upcoming regulation from their banks and it’s likely some will already have experienced two-factor authentication when making an online purchase.
But if for some reason a consumer has not heard from their bank in relation to SCA, Mr White said they should get in touch with them to ensure all their details are up to date.
How will these new rules improve protection for businesses and consumers?
SCA adds an extra layer of security to the checkout process.
Mr White said this also adds an extra layer of reassurance - giving people the confidence to shop online securely.
"For consumers, it keeps their payments even safer, ensuring they have a great shopping experience.
"And, for businesses, having the right payments technology in place for SCA means their online sales will be more secure," he said.
Visa’s data shows that when EMV 3D Secure has been applied, e-commerce fraud can be reduced by half.
"The bottom line is by keeping online sales as secure as can be, it could have a positive impact on a business’ profitability, so being SCA-ready should be a business imperative," he said.
With more people shopping online than ever before, Mr White said SCA is even more important.
"At Visa, we saw an almost 40% increase in online transactions in December 2020 compared to the previous year, so this regulation is really timely," he said.
