Online shoppers in the UK face more identity checks when paying for internet purchases from Monday as new rules aimed at tackling fraud come into force.
New Strong Customer Authentication (SCA) requirements will change the way people confirm their identity when using their debit or credit cards to make purchases online, and are expected to result in more opt-outs card payments. It is the biggest change to card payments since the rollout of chip and PIN 16 years ago, and is designed to reduce the £376million lost to online fraud in 2020 .
The measures are similar to those already faced by people logging into online banking. Customers will be asked to prove their identity when making a purchase by confirming two of three “factors”: something they are, for example by providing a fingerprint or facial identification; something they know, such as an access code or password; or something they have, like their cell phone.
Two-factor authentication checks mean customers can be prompted to verify a purchase via a one-time passcode sent via text message, which they then have to enter on screen. Other confirmations include answering an automated phone call to a landline or mobile phone or logging into a banking application.
Certain types of transactions are exempt from the requirements, primarily purchases deemed to be at “low risk” of fraudulent activity, such as when buying items at low prices, or repeat purchases such as subscriptions. High value purchases, or those that fall outside of a buyer’s normal spending habits or were made on a previously unused device, are likely to trigger additional security checks.
Mastercard expects about 25% of online transactions to require some form of additional customer verification from Monday, up from just 1% of online purchases previously.
Some card issuers began refusing certain non-compliant transactions beginning in mid-January as part of the “surge” of full SCA implementation.
Barclaycard research found that in February more than 1.2million online transactions worth over £100million were declined and retailers lost sales as a result. About 14% of shoppers noticed an increase in declined online payments and 37% went to another retailer to complete their purchase.
A spokesman for banking and finance industry body UK Finance said SCA “is an important tool in the fight against fraud, adding an extra layer of protection when people pay online with a card”.
She added: “Customers should ensure their bank has their correct details. If a customer has specific needs, they should contact their bank to discuss the assistance available.
The British Retail Consortium said retailers had been preparing their systems for many months to allow them to process the additional security checks.
Tom Ironside, Business and Regulatory Director at BRC, said: “The BRC and our members have worked with suppliers to ensure multiple fraud checks are carried out behind the scenes and any additional friction is kept to a minimum. . Customers need to be reassured that buying online has never been safer.