We’ve worked with many different merchants over the years, so we recognize that every merchant has a different approach, depending on size, revenue, vertical and a variety of other factors. Emerging merchants are attacking the introduction of PSD2 SCA into the market differently than their larger counterparts.
We should note that the goal of this mandate is to improve security in the digital world by requiring Strong Customer Authentication (SCA) on most transactions. But this doesn’t cover all transactions. As we’ve discussed previously, there are some exemptions in this mandate that are there to help speed up the transaction when SCA may not be necessary.
But we expect a lot of emerging merchants to run all of their transactions through SCA, whether they qualify for an exemption or not. From one standpoint, this is understandable, as they want to protect themselves and their consumers from fraud. But if we look closely at the process through which exemptions are processed, this picture gets a little clearer.
The merchant’s acquirer deals with any transaction that meets the requirements for an exemption. They confer with the network to determine if the transaction does qualify for the specific exemption, and then pass it on to the issuer where a decision is ultimately made on the transaction.
When they launch their business, a lot of emerging merchants work with a shopping cart or gateway who help them launch their online site, which includes helping them find an acquirer. For this reason, a lot of them don’t know their acquirers, and don’t deal with them. This complicates the process of dealing with exemptions.
But we are working with a lot of the shopping carts and gateways to create plug-ins for these merchants that can help them deal with PSD2 SCA and these tricky exemptions. This is an ongoing process, but we are confident that this will allow emerging merchants to help their consumers by sending the transactions that apply for exemptions through the proper channels.
This is the conclusion of our mini series on PSD2 SCA exemptions, however, this isn’t the last time you’ll be hearing about PSD2 SCA. We’ll be discussing this mandate throughout the spring, into the summer and through the fall, all the way up to the deadline, in September.
Now that you have this information, will you be altering your approach to dealing with these exemptions?