Why your event customer's declined payments will increase with SCA and how to avoid it
If your business takes payments online for event ticket sales then beware that a major change is coming that could result in increased failed payments and increased online purchase abandonment.
Read on to understand what the problem is and what you can do about it.
On September 14th 2019 the European Union Revised Payment Services Directive (PSD2) mandates the use of Secure (bank) Card Authorization (otherwise known as SCA) for online payments.
This directive will change the process for all online payments with cards issued by any bank within the European Union. Therefore even US based businesses with some customers in Europe will be effected.
Every payment will require two additional steps for authorization. This has some similarities with the 3-D Secure and "Verified by visa" process but is wider in scope.
The two additional steps are two challenges taken from this list:
- something the customer possesses (e.g. their card)
- something the user knows (e.g. password)
- something the user is (e.g. bio-metrics)
The purpose of asking the extra questions is to prove that the payment authorization is genuine and to reduce fraud. This is a good thing. Unfortunately it will also have other non-intended consequences.
How will it effect my event business?
Your business could be immediately effected in these ways:
- less ticket sales revenue due to failed online payments
- less ticket sales revenue due to more frequent abandonment of online purchases
If your payment technology solution is not ready for SCA then it will not know how to display the additional challenges explained above, or how to collect and process these answers. This is not as simple as it seems because the computers of the card issuer will only decide on what these extra challenges will be at the point at which the payment is requested. Also, some small payments may occasionally be exempt.
Immediately after the 14th September 2019 not all payments are expected to require the extra authentication steps. So in the beginning you could see a gradual increase in payment failures as the number of banks insisting on SCA increases.
Soon afterwards every online payment will require SCA.
Are the payment service providers ready?
The two biggest online payment services say that they are ready:
Despite this, it is worth noting that they were still updating their software and communicating with developers in late July 2019. So even if they are now ready, is your online event platform provider ready?
What can you do about it?
Ask your event platform service provider if they are going to be ready.
If your payments are mainly processed by PayPal then there is a good chance that you will get a positive answer from your event platform provider. When making a payment with PayPal, your customers are normally redirected to a PayPal page on PayPal's website where they enter their card details. This process will continue and PayPal will keep the customer on their website a little longer while they ask the extra questions.
Therefore if PayPal are ready for SCA then your service provider may not need to do anymore.
Stripe is more of a risk. Payments with Stripe are integrated with the event platform and there is no redirection to Stripe's website. Therefore each system that uses Stripe must make significant changes in order to support SCA.
A more subtle problem is the potential increase in online purchase abandonment (aka shopping card abandonment). The extra challenge questions will increase the effort required by your customers to complete their online payments. During payment, they may need to receive an SMS with a one time codes for authorization or answer questions to which they don't readily have the information available. In conclusion, expect increased abandonment even if your service provider is ready for SCA.
If you are experiencing higher than normal payment abandonment, you might consider following up with all customers that have left your website that didn't finishing their payment. Especially if SCA is new to them, they might not have been able to complete their purchases but with the right encouragement and help they might be more than willing to try again.
The Coconut Tickets event ticketing platform is SCA ready!
Coconut Tickets supports the following payment mechanisms:
- PayPal REST
- PayPal Classic
- Manual bank transfer
All changes have been made, they have been tested and are now live for event ticketing and vendor pitches.
To learn more about Coconut Tickets please visit our website here.