Europe’s online economy faces a €57bn of lost business when tougher customer identification rules come into force later this year, which look set to take consumers and many firms by surprise.
New Strong Customer Authentication (SCA) rules will apply across the European Union from 14 September, requiring online shoppers to authenticate payments twice, through additional features such as a password, a fingerprint, or a one-off code sent to a phone.
But digital businesses fear that shoppers may abandon purchases to order taxis or pay for TV and music services, when faced with an added layer of complexity they are unaware is coming, according to a new report from payments platform Stripe. The multi-billion euro loss is estimated over 12 months following the introduction of the rule change.
Around three-quarters of customers said they have not heard of the coming changes, said the survey carried out by 451 Research, which sampled 1,000 shoppers and 500 professionals at online firms across the UK, France, Germany, the Netherlands and Spain.
The report added that 74 per cent of Gen Z shoppers, those under 25, “have abandoned an online purchase in the past six months due to a bad checkout experience”.
There is a “low consumer tolerance for poor checkout design” across all age ranges, added the report, with 52 per cent of shoppers who abandon a purchase with one business likely to complete it with another.
Firms are also struggling to be ready for the new autumn changes, with only 44 per cent saying they expect to be ready on time.
This figure jumps for Europe’s small businesses, with just three in five firms with under 100 staff, saying they expect to be ready by September 14.
‘Make or break firms’
Jordan McKee, analyst at 451 Research said: “SCA is unequivocally the single most disruptive event to impact European digital commerce, and many businesses—especially smaller ones—have yet to fully grasp its extensive impact.”
Guillaume Princen, head of continental Europe at Stripe added: “SCA will make or break internet businesses. The urgency to get ready for it cannot be overstated.”
US-based Stripe was founded in 2010, and counts Amazon, Uber, WeWork and Google among its clients.