Five Tactics to Recover Sales after New Strong Customer Authentication Rules in the UK

What changes are rolled out after the Strong Customer Authentication UK deadline?

As PSD2 comes into full force on March 14, the SCA regulation rollout aims to make online transactions safer for both the merchant and the customer. The SCA is a new payment security method that’s brought in to add an extra security layer in electronic payments to prevent checkout fraud. PSD2 requires that all transactions that aren’t flagged as exempt or out of scope be declined and sent to 3DS.

Strong Customer Authentication is triggered before accepting an online transaction and based on a few scenarios. For instance, shoppers may be prompted to verify that they are who they claim to be when making a high-value purchase or a high number of low-value eCommerce transactions that seem out of the ordinary to their bank. These verifications are pretty similar to the authentication measures used when logging into online banking.

As part of SCA compliance, merchants need to incorporate extra authentication into their checkout process. The FCA has encouraged eCommerce merchants and Payment Provider Services to work together with tech vendors to make verification easy for shoppers to try to smoothen the customer journey. This can be done by providing multiple options for multi-factor or two-factor authentication, such as:

• Knowledge: What the Customer KNOWS, eg password, pin, pattern.
• Possession: What the Customer OWNS, eg mobile phone, logging into bank app to approve.
• Inherence: What the Customer IS, eg biometrics like fingerprint, facial recognition, etc.

Card issuers have already been declining some non-compliant online payments since January, but all non-compliant transactions will be declined after the 14 March deadline. The SCA requirements were originally announced by the Financial Conduct Authority (FCA) with UK Finance pre-Brexit. The deadline was extended to March 2022 to give more time for payment providers to help online retailers upgrade their checkout payment process due to COVID-19.

What do the Strong Customer Authentication changes mean for eCommerce merchants and shoppers?

While Strong Customer Authentication rules have been put in place to give shoppers peace of mind and help merchants to have measures in place that draw fewer chargebacks, these come with some challenges.

Shoppers get fraud protection, but at a cost

You can’t deny that scams are becoming creative enough to have you trip up once or twice. If you had to choose between a flawless customer experience and online payment fraud protection – you’d choose the latter.

The benefit is simple: having eCommerce merchants implement additional authentication before accepting card payments helps to protect shoppers and make them feel more confident about shopping online. But once the SCA comfort sits in, the frustration of SCA creeps in as customers may often come into contact with their arch-nemesis: friction and declined payments.

It happens to the best of us! There are certain scenarios that may be out of the merchant and device’s control. Some typical scenarios at the point of the transaction can be:

• Purchasing a product from a close family member’s account.
• Outdated details for your one-time passwords (OTP).
• Classic card-not-present scenario.
• No secondary device such as mobile phone or desktop.
• No phone signal.
• Non-tech savvy users having no luck.
•  Sweaty thumbs that make your fingerprints unrecognisable. (Hey, it happens!)

These frustrating SCA scenarios can cause some payments to be erroneous and declined, ultimately driving basket abandonment and cutting conversions.

Merchants get a safety net, but a leaking hole in their sales bucket

The good news is the extra layer of SCA protection helps prevent chargebacks and all that comes with it. But the bad news is that more sales are at risk of being declined or abandoned – and some customers may be unforgiving.

Until recently, Mastercard says, only one per cent of online purchases triggered a password input verification or something similar. Now, it expects about 25 per cent of online transactions to require a form of extra authentication by the shopper after the deadline. 

Through no fault of your own, this highly negative experience of declined payments can have shoppers irrationally associate this with your brand – even if it’s happening across all brands! This makes customer acquisition more challenging and creates a leaking hole in your sales bucket. But like anything that leaks, you need to catch each drop of sale that falls and implement a strategy to bring customers back to complete the purchases from your brand.

Five tactics marketers need to regain those lost sales

In Q4 of 2021, between 70 to 80 per cent of baskets were abandoned on mobiles, tablets, and computers. This could potentially increase in the new SCA era as shoppers may be forced to go offsite and to a third-party app like SMS, email, or banking app to verify themselves. This is a crucial moment, as any friction can make them impatient and lose interest.

While it may seem out of your hands, any slight chance of losing conversions and your rightful ROI means it’s important to bring back the customer’s attention with the right content at the right time. It’s a huge opportunity to set you apart from your competitors! 

To help you take your customer engagement strategy to the next level, Mapp’s Principal Account Director Josh Beale gave his five top tips to help you act fast and recover those missed sales.

1. Understand that SCA is taking place everywhere in eCommerce

It’s a PSD2 requirement – so it’s taking place everywhere. The most important thing is to ensure that you meet the SCA regulations first by working with Payment Providers and tech vendors before the deadline.

Next, it’s about communication. UK Finance and banks have already shared authentication comms to their customers which is already half of the work done, but it’s important to communicate it from your end too, when necessary.

So far, around 75 per cent of payment traffic has had a soft decline from the issuer. This shows that many customers have come across this, making this a temporary barrier that may become second nature to them as time goes along. While it may seem tempting to let time go by, it’s a pivotal time to ramp up your marketing and set your business apart from the competition. 

2. Leverage first-party data that’s GDPR compliant

To really cut through the noise with relevant content at the right time, you need to understand your customers. First-party data is more essential than ever right now as it’s relevant, readily available, accurate, and owned by you. Using a Customer Data Platform (CDP), you need to ensure you’re collecting and using first-party data that’s GDPR compliant to better understand your marketing efforts and customer needs better. This enables you to power a data-driven marketing strategy to drive customer engagement by putting insights at the core of your marketing. You’ll be able to take away insight-led actions, and create relevant and personalised content that relates to them.

But before pointing your fingers at SCA as the reason for basket abandonment, it’s important to ensure everything in your checkout process is working and optimised. It’s crucial to check the fundamentals as a first step. Your CDP is crucial here as it gives you a better overview of what’s going on in the customer journey. For example, there could be a field validation error that’s causing high drop-offs at the transaction stage. Mapp’s Customer Intelligence feature makes it easy for you to see where customers are spending time and leaving in what stages of the checkout process, by displaying the high exit rate per stage, for example.

But if you notice a high percentage of customers that aren’t converting, but are revisiting the product page and checkout page multiple times for a long duration, you’ll need to act fast.

3. Segment your audiences

Identifying your audiences based on their behavioural data and creating an “abandonment audience” helps you segment your audience to better aim your retargeting and re-engagement campaigns. For instance, for audiences that have been on a certain part of the cart page for more than five minutes and did not purchase, you can flag as the customers with the SCA problem. Your CDP should be able to segment audiences seamlessly to make it easy to take action quickly, based on these insights.

For more about segmenting audiences and customer profiles, have a read on unified customer profiling.

4. Launch dynamic campaigns: retargeting, discount, basket abandonment campaigns

Now, that you’ve identified who to target, it’s about bringing them back to give your brand another chance. Maybe they’ve had time to sort out their SCA issues and have forgotten to come back. Don’t leave it to fate, but instead bring them back at the right time, with the right content. Some campaigns can be:

   Basket abandonment emails: It’s a standard, but the content of the emails is essential here. Having personalised content can help you cut through the tension and create a sense of care from your brand to the customer.

   Retargeting & paid display advertising: Use retargeting like Facebook Dynamic Ads for those abandoned purchases or products that they kept visiting, but didn’t buy. It helps to refresh their interest and go back to exploring the products on your brand.

   Omnichannel: The 10k steps a day is still a thing right? Customers may want to attempt this purchase in-store, so encouraging them to make a pitstop to their local store along the way can make that conversion happen offline. You can read more about geo-targeting marketing here.

   Triggered exit-intent pop-ups: Are your shoppers giving up and heading for the close button? On-site pop-ups may do the trick to prevent exits – but it needs to be worth it. Offering a £5 discount code to encourage them to complete the SCA and transaction may make it seem worth it to the shopper to follow through with the conversion.

5. Keep customers engaged

Here’s where you want to keep your customers engaged with your brand. After all, you’ve jumped through many hoops to try to get them across the finish line, so why not earn their loyalty? Using your customer data to make insight-led customer experiences can help adjust your marketing and nurture your customers into becoming loyal customers.

With customer data, having relevant content such as product recommendations and personalised emails are just some of the ways to help you build relationships with these customers to get them to make repeat purchases. Mapp’s e-book gives you more on leaving gut-feel marketing behind and adopting insight-led marketing tactics to drive customer engagement with your brand.

Need help re-engaging your customers?

The purpose of any cross-channel marketing activity is to get customers to convert online. Strong Customer Authentication may seem like it’s out of your hands but it’s in the power of your customer data, CDP, and insights to get those customers back to the finish line.