Businesses and banks are concerned over new proposed standards from the European Banking Authority (EBA) that would require “strong customer authentication” for all electronic payments over €10 (around $10.50). These new rules, issued in response to requirements in the Payment Services Directive, would make online transactions safer for the consumer but slow down the process and possibly lead to fewer online sales.
According to Finextra, “strong customer authentication” would most likely be in the form of additional confirmation steps, such as entering passwords, one-time codes or using a physical card reader. And since the average online retail transaction in Europe last year was $85.63, it can be assumed that these extra steps would be applied to most transactions within the European Union.
The main worry from online retailers is that these extra steps could increase the online shopping cart abandonment rate, which is already estimated to be around 68–71 percent worldwide. It would also significantly impact one-click checkouts, such as Amazon’s One-Click and PayPal’s One Touch, in Europe.
While retailers are concerned about the lag time and how it will affect revenues, everyone is in agreement that additional online security measures need to be taken to protect consumers. Credit card fraud increased by 18 percent in the U.K. alone last year, with most the result of online purchases, according to Ecommerce News.
Some experts recommend that, instead of adding extra steps to the checkout process, utilizing mobile devices might make more sense. Mobile devices possess advanced technology that can collect and combine identifying factors such as the location, manufacturer, operating system, etc., allowing it to become a permanent ID for its owner. Once a customer is tied to a permanent device ID, organizations can recognize and trust returning devices, enabling customers to make transactions faster with increased security.