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Contact us
If you would like us to contact you to discuss your payments needs, please complete this form. We’ll get in touch with you using the phone number and email address provided, to design and create the right payments solution for you.
Contact us
If you would like us to contact you to discuss your payments needs, please complete this form. We’ll get in touch with you using the phone number and email address provided, to design and create the right payments solution for you.
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If you have a high volume of low-risk transactions up to €500, could you take advantage of available exemptions from Strong Customer Authentication?
Explore Transaction Risk Analysis with Elavon
Elavon fraud reduction
Elavon approval rates
in chargeback fraud
What has PSD2 and Strong Customer Authentication really achieved?
The Payment Services Directive 2 was more than the catchily-named sequel to the initial Payment Services Directive. It intended to make modern, cross-border digital payments easier, faster, and safer for everyone.
Although PSD2 was the name of the regulation itself, at its core was Strong Customer Authentication, also known as SCA.
SCA introduced a process to better identify genuine card holders by having them provide two or more of the following:
SCA also paved the way for payments optimisation based on Transaction Risk Analysis (TRA) - one of the available SCA exemptions - to help businesses maximise online sales while minimising fraud.
If you have a high volume of low-risk transactions under €500, or equivalent in local currency, our award-winning Transaction Risk Analysis is a service enabling SCA exemption for eligible transactions, providing a frictionless checkout for customers, reducing cart abandonment and increasing sales for your business. While the industry norm for exemptions tops out between €100 and €250, our ability to offer €500 exemptions is due to our below average fraud rates and expertise in this field. Talk to us to find out more.
For the support we gave our customers throughout the PDS2 regulation changes, Elavon Europe was named Best Service to Business at the UK Card and Payment Awards 2022. Our Transaction Risk Analysis was an integral part of that overall achievement.
The roll out was phased between 2019 and 2022 with groups of countries implementing the regulations at different times. Poland, Spain, Sweden and Norway were among the first group of 21 nations to implement SCA in December 2020. Ireland, Germany and Denmark were among the second wave of nations to go live throughout 2021, followed, finally, by the UK in March 2022.
That time frame, of course, coincided with a global pandemic that effectively took out of action two of the sectors with the most prolific fraud issues - retail and hospitality.
While we can’t yet strip out the pandemic effect within those figures, comparing ecommerce fraud rates from before the first nations implemented SCA to those after the final one, shows a consistent and stark trend of improvement.
“PSD2 was a foundational piece and long overdue,” says Russell Green who was customer-facing on the Elavon PSD2 project team and aligned to the Travel and Hospitality Taskforce with the UK Finance Group. “It was the biggest change in payments in the last 10 years, and very successful in terms of vision and collaboration and the breadth of people within the payments ecosystem who had a voice.
“Fraud levels dropped significantly. Now, is that solely regulation? Or regulation and the impact of Covid? We saw a sudden reduction in face-to-face transactions, people weren’t able to buy in traditional forums so we saw double-digit growth in ecommerce, all this just as the new security protocols were introduced. Volumes went in one direction while fraud went in the other, so the difference may look even more incredible than it may have in more typical times,” says Russell.
*Source: Elavon fraud rates including non-3DS ecommerce transactions Q3,2019-Q1,2022.
We can’t release commercially sensitive information, but the results are particularly impressive - in part - because Elavon specialises in providing safe, secure payments for some of the most fraud-targeted sectors, including retail, airlines and travel.
“For our customers it means less losses,” says Federico Gaffney, who was working with the regulators on the Elavon PSD2 project team.
“Fraud ultimately, or mostly, impacts merchants and that increases the cost of accepting payments. The fraud cost is an expense as well as a loss to our merchants. So, less fraud is a really good thing for everyone, including card holders – our customers’ customers,” he adds.
“Less fraud means that we can also offer other mechanisms to reduce the friction PSD2 and SCA have introduced, which, in turn, reduces cart abandonment even further. So overall, reducing fraud is good for both the ecosystem and the businesses we work with,” says Federico.
**Source: Elavon fraud amounts including non-3DS ecommerce transactions Q3,2019-Q1,2022.
“At the start of the PSD2 roll out had someone suggested approval rates after PSD2 would have been in line with our approval rates before we started this programme, I don’t think anybody would have believed that … and yet we have managed that,” says Rob Evans, PSD2 Project lead at Elavon.
“We were expecting that the project was going to be a challenge, and it required collaboration from many different teams within Elavon, as well as across the payments landscape,” adds Federico Gaffney, who was regulator-facing in the Elavon PSD2 Project team.
“Thankfully, and proudly, Elavon was able to succeed in implementation with our customers without major disruption.”
“We’re all customers as well, right? And we all interact on the web. I think what PSD2 has done is it’s given reassurance and confidence in the market,” says Rob Evans, PSD2 Project lead at Elavon.
“I think there’s a lot of people more conscious now about their information, their data, who’s storing it, how it’s being stored and whether or not your card details are being transacted securely.
“PSD2 has been successful in making sure that that has now taken place. So, when you’re online and you’re purchasing something and you get that verification through your phone, table or device – wherever it may be – it gives consumers more confidence that when they transact their details are going to be safe,” he says.
“That’s going to be more and more important as we move more and more into the ecommerce and digital space,” adds Rob.
“For the first time, merchants also got a better understanding of their solution architecture for their customers and who to work with and when,” says Russell Green, who was customer-facing for the Elavon PSD2 project team. “Our customers took the opportunity to redesign the customer payments journey, to make a more seamless and frictionless experience from their customers perspective.”
“Payments, in some quarters, were almost seen as being overly complicated especially with all the acronyms we use,” says Rob Evans, Elavon PSD2 project lead. “As merchants needed to get ready for PSD2, they needed to break down their payment structure into little bite sizes to know who needed to do what… their acquirer, the issuer, the banks, who are they all and from where are they operating… so awareness of the infrastructure is much better now than it’s ever been.”
“Cart abandonment, where consumers bail out before completing their online purchase, is inevitable while card holders are getting used to new challenges in authentication,” says Federico Gaffney on the Elavon PSD2 project team. “We expect that to keep improving as the new way of making purchases online embeds in our lives and we get more used to it.”
If your business
“If you’re seeing drops in authorisation rates, increases in service fees and a less than elegant customer experience talk to your payments service provider and your Elavon relationship manager,” says Russell Green, Elavon PSD2 project team. “We have witnessed challenges with flagging transactions correctly, leveraging the various out of scope or exemptions options to minimise friction whilst delivering a great customer experience.”
“One of the initial objectives of the regulators was to ensure that there were alternatives to card payments, which were basically account-to-account payments,” says Federico Gaffney, who was working closely with the regulators on the Elavon PSD2 project team. “PSD2 hasn’t achieved yet what it aimed to on the open banking side of things. So, account-to-account payments are growing but not reaching the levels of volumes to yet be a valid alternative to card payments for the whole market.
“PSD2 will be revised, and that’s PSD3. I predict they’ll be focusing a little more on exemptions for those types of transactions that do not carry risk of fraud,” he adds.
“I believe PSD3 will look at harmonising alternative payment integrations,” says Russell Green, who was supporting customers with implementation on the Elavon PSD2 project team.
“Rewriting the rulebook will be a challenge. PSD and PSD2 got an infrastructure in place and a regulatory framework for payment service regulators. The next step will be reimagining the fraud detection structures completely.”
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