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E-commerce will be disrupted by EU’s €10 checkout rules

European rules on e-commerce could “seriously disrupt” online shopping and “inconvenience consumers”, according to Visa. But will the Commission budge on this consumer protection issue?

The European Banking Authority (EBA)'s strong customer authentication (SCA) rules, part of the second Payment Services Directive (PSD2), stipulate that both online and card payments will be subject to authentication requirements, which means that all transactions for values above €10 will also have to go through an additional safety check, involving passwords, codes or using a card reader.

The payment card company issued a statement yesterday expressing its concern that the SCA could disrupt the online checkout experience, saying that more than half of e-commerce sales are for values of more than €10.

Visa points to the statistic that 61 per cent of European consumers say increased checkout steps will cause them to abandon purchases.

€6bn could be impacted in retail sales outside EU

Visa also argues that this will also affect online retailers outside Europe. It stated: “The proposals mean that international websites will have to follow the new European rules or purchases will be automatically declined. Visa estimates that payments totalling more than €6bn could be impacted, representing two-thirds of all European transactions on international websites.”

Because the EU SCA rules won't just affect online purchases but all card purchases, it is also likely to affect drivers using cards to pay at toll booths or for parking, which Visa says could cause traffic. However, this would only occur if the payment is for more than €10 and would not therefore affect all journeys.

Visa's chief risk officer for Europe, Peter Bayley, said: “These new proposals threaten to seriously disrupt the way we all shop online. The plans will bring a host of complications and inconveniences including more declined transactions and longer and more complicated checkout experiences with little if any benefit to consumers. We completely support strong security measures. However, managing payments is always about balancing security with convenience. The planned one size fits all approach tips the balance too far one way, making it difficult for consumers to make purchases wherever, whenever and on whatever device they want.”

SCA is about consumer protection

However, the European Commission has stated that PSD2 is intended to increase consumer protection. The EBA will publish its final proposed standards on 12 January 2017.

Bayley also makes the point that fraud on Visa cards is low, valued at about 5 cents in every €100 spent and, additionally, consumers are protected from fraud losses since all the risk is taken by the merchants and banks who, together with Visa, have already implemented a number of security measures to prevent fraudulent online purchases. He said: “They are prepared to accept that risk to give a seamless experience to their customers as they know this makes sales more likely and it’s what people now expect.”


CTMfile take: Visa makes some valid points regarding the fact that fraud on cards is relatively low and consumers already have protection from banks, merchants and card companies. It will be interesting to see if the Commission will budge on this issue of consumer protection.


This item appears in the following sections:
Payments - Collecting at POS
Card Payments at POS
Collecting Payments on the Internet
Collecting Payments via Mobile

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