EML Open Banking Uncovers A 37% Increase In Payment Declines Following SCA Implementation

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99% of merchants have seen an increase of at least 5% in payment declines (with an average 37% decline) following the introduction of Strong Customer Authentication; a third (35%) saw payments fraud jump since the start of the pandemic.

Nuapay (EML Payments Limited’s (ASX: EML) Open Banking business), has revealed that U.K. businesses have seen payment decline rates increase by an average of 37% following the enforcement of Strong Customer Authentication (SCA) rules on Mar. 14.

As the cost to business continues to compound, EML commissioned data highlights the importance of merchants acting now to review the technology used at checkout. Open banking payments offer a secure, efficient and cost-effective alternative to traditional cards.

More than a third (35%) of the payment decision-makers surveyed said their businesses’ payment fraud rate had increased versus two years ago at the beginning of the pandemic. Alarmingly, however, when asked if current payments security measures such as PSD2 (the second Payment Services Directive) SCA were fit for purpose, 62% were dissatisfied and felt there was still room for improvement.

Notably, nearly all of the merchants surveyed (99%) have seen an increase in payment decline rate of 5% or more since the new regulation came into force.

Additional findings:

  • 29% believe the regulations need to go further to prevent fraud.
  • A third (33%) said the regulations have a negative impact on the customer experience.
  • By comparison, 39% felt the regulations were fully fit for purpose.

“As the research shows, SCA regulations have been far from the silver bullet that regulators might have hoped, creating serious checkout friction and frustration for consumers and lost sales for businesses,” explained Brian Hanrahan, CEO, EML’s Nuapay Business Division.

”Open banking payments offer a clear solution because they’ve been designed since Day 1 to comply with SCA while giving a great mobile-native user experience. They are inherently far more secure than other forms of payment as they don’t require a customer to share their card details with the merchant.”

The new research shows that security and data protection concerns are set to continue. A third (33%) of merchants agreed that payments security would be their biggest challenge over the next 18 months, and a further 29% said data protection would be a primary concern.

The news follows an announcement by Nuapay last month that one in four (25%) of payments professionals predict that open banking will become the most popular payment method amongst customers in the next 5 years.

Meet us at the Merchant Payments Ecosystem MPE Berlin, Germany event from Jul. 5 – 7, where Brian Hanrahan is excited to be speaking on stage about open banking during Session 4 tomorrow at 15:00 PM CET.

About EML Payments and Nuapay

Wherever money is in motion, EML helps businesses create awesome payments experiences for their customers. Our technology powers the payments process, moving money quickly, conveniently and securely while our programme management expertise creates superior configurable, feature-rich payments solutions.

Nuapay is EML’s market-leading Open Banking business. Direct Debit, Credit Transfers and Instant Payment products are also available through one single ‘bank-grade’ platform, easily accessible through industry-leading APIs. Businesses and their customers benefit from the immediacy of Open Banking and account-2-account payments and can save time, money and resources at every turn. This is payments as it should be.

For more on EML visit the website here or check out other recent media in the Newsroom here

For more on Nuapay visit the website here

Research Methodology

The survey was conducted by Censuswide amongst a sample of 750 payments decision-makers (aged 18+) with the job titles of CFO, Financial Director, Head of Payments, Head of Product, Head of Innovation, Head of Customer Experience, Marketing Director, Head of Marketing, with an equal split in the following industries: Financial Services, Gaming and Gambling, Travel and Airlines, Education, Utilities, Healthcare, Retail, Catering and Leisure, Telecoms, Software/Marketplace Provider. The survey was conducted from a random sample of adults in the U.K. Fieldwork was carried out between May 11th to 20th, 2022. Censuswide abides by and employs members of the Market Research Society, based on the ICC/ESOMAR international code on market, opinion, social research and data analytics.

Article by EML

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