The Payments Services Directive 2 (PSD2) introduces new rules around Strong Customer Authentication (SCA) to make payments safer, more secure and protect consumers from fraud. This means most online payments in the EEA will require SCA. However the legislation also introduces SCA exemptions that aim to minimise friction when a transaction risk is low.
The goal with transaction optimisation is to understand how issuers are adapting to PSD2 and recommend the route with the highest authorisation success to maximise conversion, whether the best course of action is to authenticate a customer using 3D Secure, or whether you should proceed directly to authorisation, and which SCA exemption is best suited.
Transaction optimisation needs to be enabled on your account before it can be used. Please speak to your account manager about enabling transaction optimisation.
Authentication provides an extra level of security during checkout, however authenticating customers affects conversion - a large percentage of customers abandon checkout when asked to authenticate using 3DS.
3D Secure 2 (3DS2) introduces the option for frictionless authentication, support for SCA exemptions and sending more data elements on each transaction, which aims to improve the customer experience with a less disruptive authentication.
Therefore, it is preferable to only authenticate when you are concerned a customer is a fraudster, or when an issuer is going to enforce authentication anyway. The challenge is knowing whether an issuer is going to enforce authentication.
You could just attempt to avoid authentication by going directly to authorisation and use an SCA exemption, but if the issuer does enforce SCA you’ll get a soft decline and have to go back and authenticate the customer, and then perform a second authorisation. This may be undesirable because each attempt adds additional latency to the payment process.
Ravelin’s transaction optimisation will optimise your transaction routing for the best possible chance of success by avoiding unnecessary friction and maximising successful payment authorisations.
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