How Will SCA Adoption Impact Chargebacks?

How Will SCA Adoption Impact Chargebacks?

Tracy Cray of Chargebacks911® Offers Authentication Insights for UK Finance

The rollout of Strong Customer Authentication (SCA) rules is among the most significant changes coming to the European payments space for the foreseeable future. In a new feature for UK Finance, Chargebacks911 Director of Card Scheme Compliance Tracy Cray addresses some of the most burning questions about the impact of SCA on the market.

UK Finance seeks to serve as “the collective voice for the banking and finance industry,” representing nearly 300 firms across the British payments space. The organization works on behalf of members to promote a transparent and innovative banking and finance industry, offering research, policy expertise, thought leadership, and advocacy.

SCA rules are meant to prevent fraud and protect the payments and finance industry from abuse. However, no one can confidently say they will necessarily reduce chargeback issuances.

“We are well aware that the financial landscape is up to speed with Strong Customer Authentication (SCA) and its implementation,” Tracy says. “What is less known is how the new legislation is likely to impact chargebacks.”

Tracy notes that a sudden reduction in chargeback issuances will be highly unlikely. Merchants can deploy Transaction Risk Analysis (TRA) to thread the needle of certain SCA challenges, but this will come at a cost as well, as it could impact fraud liability.

“If merchants leave the responsibility for TRA to issuers and incorporate 3DS2, it should mean that fewer payments are challenged, there is less friction during the checkout process and issuers will remain responsible for a good portion of a merchants' chargebacks.”