Amazon, Worldpay, and Stripe — the eCommerce and payment companies — are expressing concern that a lack of preparedness by the industry to new EU security regulations could put billions of dollars of eCommerce purchases at risk.
According to a report in The Financial Times, the new rules, which require more verification for online payments of more than €30 and go into effect in September, require big changes to processes and technology at retailers, banks and payment groups. They also require cooperation from consumers, who the paper noted largely aren’t aware the changes are coming. The new rules are aimed at reducing fraud. If customers don’t approve a transaction by entering a code via text message from their banks or scanning their fingerprint on their mobile device, they may not be able to make the purchase. That could result in lost sales.
“The deadline is hurtling towards us in September, and for those who aren’t prepared, it is going to have a huge negative effect on conversion rates,” Patrick Collison, chief executive of Stripe, said in The Financial Times report. “Candidly, the state of readiness is poor.” Collison said the rules will require every European merchant to restructure their checkout process. “It’s almost certainly the largest migration that European online retailers have ever had to do,” the executive said. A survey commissioned by Stripe found that the EU could lose €57bn in economic activity in the first year after the rules take effect. The industry is seeking a grace period so that everyone involved is prepared. Less than half of the companies surveyed by 451 for Swipe expect to be ready by the deadline.
Industry executives are worried not many consumers have installed their bank’s app or offered up their mobile phone numbers to authenticate a purchase. They fear the result will be huge numbers of shopping cart abandonment as consumers face friction when checking out. Amazon, which could see its one-click checkout process impacted by the rules, told the paper it is finalizing its preparations.