On the 31st December 2020, when many people are looking ahead to what the New Year will bring, travel payments professionals will have an extra set of thoughts in mind. That’s because the way online payments are made in Europe will enter a new era as the Strong Customer Authentication (SCA) requirements of the Payments Services Directive II come into force. This represents a major victory in the fight against card fraud. Unfortunately, according to Amadeus latest industry research, not every travel firm will be ready.
As a reminder, SCA mandates the vast majority of online payments made in Europe be subject to two-factor authentication, for example entering a one-time passcode sent to your phone alongside payment card details. This seemingly minor change has significant implications in travel where there are many players in the distribution chain that must each play a role in making SCA checks happen.
Based on Amadeus recent survey with airlines, hotels and travel agents, only one third of travel firms said they expect to be ready to apply SCA checks across all sales channels in time for the 31st December deadline, with a further quarter likely to be ready in the first half of next year. It appears that some travel firms may have been caught out as a significant majority had expected SCA to be delayed still further, perhaps due the significant impact caused by COVID-19.
When asked about the biggest challenges to SCA readiness, 65% of firms cited the COVID-19 pandemic and 55% a lack of internal resources. On average, Amadeus research suggests the pandemic has set SCA programs back by around six months. This appears to have been a significant blow when the industry was already struggling to meet the new requirements.
However, there remain reasons for optimism. A great deal of progress has been made of late: with the new 3DS 2 authentication protocol now available, the industry can at last access the function rich technology it needs to deliver SCA in a wide variety of scenarios.
Industry body UK Finance, the trade association for the UK banking and financial services sector, is taking the lead on creating payments industry technical guidance and defining how SCA should work for indirect sales in the complex travel distribution environment across Europe. This work is a precursor to industry players collaborating to find solutions to persisting issues, such as how to effectively identify transactions that should be exempt from SCA and to communicate this through the distribution chain.
Amadeus numbers also point to the fact that 45% of firms believe their direct channels will be SCA ready before the end of the year, with this figure rising to 85% by the first half of 2021. Whilst not perfect, this is a significant improvement on just six months ago.
Finally, two-thirds of the respondents to the survey believe that SCA will increase abandonment, and abandonment means lost sales. Now, more than ever before, this is something the travel industry cannot afford. So, the message is clear: travel players need to work together to prepare for SCA’s introduction across the European Economic Area on 31st December.
To facilitate readiness, as travel companies race to prepare their payments systems for the impact of SCA, the new Amadeus report offers advice on steps travel firms can take.
„Tendinţele pe care le-am remarcat înainte de începerea pandemiei s-au accelerat pe perioada stării de urgenţă. Am văzut acest lucru ca o oportunitate, un tipping point pentru bancă. Post-pandemie nu avem cum sa ne întoarcem la comportamentul financiar pe care îl aveam până în februarie a.c. Relaţia românilor cu online-ul s-a schimbat. In plus, cardul fizic se va dematerializa. Vom asista la o scădere a cererii pentru cardurile fizice, respectiv la o creştere a preferinţei pentru componenta digitală a acestora.”