Britain’s shoppers will face more identification checks when purchasing online, as new rules to clamp down on fraud come into force today.
Customers may now need to verify their identity when buying items worth more than £25 online, in a bid to combat online fraud which sees shoppers scammed out of £380m every year.
The new Strong Customer Authentication (SCA) requirements are expected to lead to more card payments being declined.
New rules will require two-factor authentication on most online purchases from March 14, as experts warn it will cause significant disruption to online retailers and shoppers
The Financial Conduct Authority told retailers they must have ‘3DSecure’ cyber security software in place by March 14. This software enables banks and card companies to carry out the ID checks.
In the biggest change to payment security since chip and pin, shoppers will now be asked to prove their identity by confirming two of three ‘factors’ at the online checkout.
This could mean using fingerprint or facial ID, entering a passcode sent to them via text message or logging in to their mobile banking app, for example.
Some retailers already ask for these checks, but it will now become widespread.
Mastercard said that around 25 per cent of online transactions will require extra verification, compared with only 1 per cent of online purchases previously.
Not all transactions will prompt the dual authentication, as those with low risk of fraudulent activity such as low-cost items or repeated purchases, are exempt from the new requirements.
How can you help make sure payments go through?
A spokesperson for UK Finance, the banking and finance industry body, said: ‘Strong Customer Authentication (SCA) is an important tool in the fight against fraud, adding an additional layer of protection when people pay online using a card.
‘When a customer makes a payment online, their bank or payment provider will need to verify who they are before the transaction will go through.
‘This can be done in a number of ways, including a one-time password sent via text, receiving a phone call, or signing into a bank app.
‘Customers should make sure their bank has their correct contact details.
‘If a customer has any specific needs, they should contact their bank to discuss what help is available.’
There are concerns that some businesses are not set up to deal with the substantial changes, meaning customers could be blocked from making payments unnecessarily.
Shoppers have been warned of slower online checkouts, with high-value or unusual purchases most likely to prompt the extra security checks.
What if you don’t have a smartphone?
Experts have also warned that a substantial number of people, including the elderly, those without mobile phones, or in areas with poor mobile signal, will be hit hardest by the changes.
Ofcom’s latest report on smartphone use suggested that only 55 per cent over-65s used one, for example.
Major high street banks have come under fire in the past for telling customers they needed a mobile phone to verify their identity to make purchases online, without offering alternatives.
Most banks now offer a number of alternative ways to confirm a customer’s identity, such as a phone call.
If you don’t have a smartphone, suffer poor mobile signal at home or have any other reason that you think payments may not work, speak to your bank or credit card provider to see what they can do?
Will more people abandon purchases?
According to Barclaycard data, one in three online shoppers at stores who had the new checks in place ahead of the deadline had abandoned a transaction because of the extra verification processes.
And separate research has suggested that nearly two thirds of consumers would avoid retailers with a poor online payment experience, meaning some businesses could potentially see a drop in sales.
According to the latest findings from online payment platform Plaid, a third of customers would abandon an online purchase due to overly complex identity checks or verification.
Keith Grose, head of Plaid UK said: ‘Many merchants will know well that consumers want their payment experience to be as smooth as the rest of the online shopping experience.
‘How people pay is no longer an afterthought, but a crucial part of the customer experience.
‘As businesses look to bounce back from the turmoil of the past two years, and support the economic recovery by doing so, they cannot afford to lose customers.’
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