Meeting the Hidden Cost of Strong Customer Authentication (SCA)

Figures from EBA show that the average value of fraudulent card transactions across the EU has fallen by 50% between June 2020 and April 2021
However, there has been issues with SCA, including increased transaction failure, rejected transactions and increased abandonment
Using behavioural insights, a UK bank was able to save £1 million annually and improve fraud detection rates by 42%, with no impact on abandonment rates

LONDON - (23 June, 2022) – BioCatch, – BioCatch, the global leader in behavioural biometrics, and Goode Intelligence have released a report highlighting the challenges and potential improvements of strong customer authentication (SCA) implementation across the EU.

According to the European Banking Authority (EBA), fraud rates have fallen for issuers because of high SCA compliance adoption, with the average value of fraudulent card transactions falling by 50% from June 2020 to April 2021. However, the decreasing fraud rates have come at a cost, with EuroCommerce, Microsoft and CMSPI all citing an increase in customer abandonment rates. Indeed, CMSPI reported a 30% rise in abandonments which is estimated to have cost merchants £74 billion in lost sales.

Beyond Compliance: Comply and Thrive in a PSD2 World from Goode Intelligence shows that to reverse the trend of declining customer experience, banks and payment services providers are turning to behavioural biometrics. Analysing behaviour has become integral to fighting fraud, remaining SCA compliant and mitigating implementation problems that lead to cart abandonment.

The report shows how a major UK-based bank use behavourial biometrics to:

Increase fraud detection rates by 42%
Save an estimated £1 million annually
All with no demonstratable negative cost on consumer experience
And no significant increase in abandonments

"Our research shows that banks and payment services providers must focus on ironing out some of the wrinkles that SCA has introduced.” Said Alan Goode, CEO & Chief Analyst at Goode Intelligence. “It is massively positive that SCA adoption has been so high and seems to have led to a reduction online payment fraud, but consumers have suffered from high payment abandonment, failure, and rejection rates. The research has identified that behavioural biometrics is a proven technology to improve SCA transactions and smooth the wrinkles that SCA may have introduced.”

"SCA has undoubtedly helped the banking industry bring down payment fraud levels," said Eyran Blumberg, COO at BioCatch. "Now is the time for banks and FinTech’s to focus on reducing payment attrition and eliminating friction where they can. We have been working closely with our customers to implement behavioural biometrics solutions which is key to addressing the new challenges SCA compliance has presented. These solutions leave organisations with a long-term strategic solution that combats payment fraud and minimises any impact on the all-important customer experience."

About BioCatch

BioCatch is the leader in Behavioral Biometrics, a technology that leverages machine learning to analyze an online user’s physical and cognitive digital behavior to protect individuals online. BioCatch’s mission is to unlock the power of behavior and deliver actionable insights to create a digital world where identity, trust and ease seamlessly co-exist. Today, BioCatch counts over 25 of the top 100 global banks as customers who use BioCatch solutions to fight fraud, drive digital transformation and accelerate business growth. BioCatch’s Client Innovation Board, an industry-led initiative including American Express, Barclays, Citi Ventures, and National Australia Bank, helps enable BioCatch to identify creative and cutting-edge ways to leverage the unique attributes of behavior for fraud prevention. With over a decade of analyzing data, more than 80 registered patents, and unparalleled experience, BioCatch continues to innovate to solve tomorrow’s problems. For more information, please visit www.biocatch.com

For more information on SCA, download the full report here.

About Good Intelligence

Goode Intelligence is the leading digital trust research, consulting and events organisation covering Authentication, Biometrics, Fraud & Security, and Identity - founded in 2007 and based in London.