2019 Peak Season: Preparing for Friction Free Payments with SCA Regulations

November 21, 2019
Read time: 7 min
Julien Duméry
Julien Duméry
Cybersource | Manager for Cybersource France and the Benelux countries

“2019 Peak Season”, the end-of-year promotional period, has started and will last until the end of January 2020.

It’s a crucial period for all merchants, particularly eCommerce retailers, accounting for up to 40%1 of annual turnover figures. Payment management systems must be at the top of their game to handle the increased volume and give customers a great experience.

Here we look at what every retailer should consider for current state of play and give a successful 2019 peak season.

Peak activity periods are becoming more and more random

Historically, Black Friday

kicked off the holiday shopping season in the United States.  It got its name because it marked the day that, if sales were successful, the retailer was able to put their books in the black. This year, Black Friday will take place on November 29. This U.S. phenomenon is now a 3-day event culminating with Cyber Monday. And it is no longer limited to the United States. Retail giants around the world are now starting to introduce more and more events to extend the traditional end-of-year sales period. In India, the ‘Big Billion Days’ took place on September 29 and October 4. In France, the ‘French Days’ were held from September 27 to October 1, and the ‘Singles Day’ in China will take place on November 11.

Faced with this proliferation of peak activity periods, eCommerce retailers must be prepared for the surge of transactions on their websites.

Put your trust in credible partners

It’s a good time to remind you that adopting a robust payment platform, that can support an increased volume of transactions, is advisable when preparing for these peak periods. Just to give you an idea of figures, December 14, 2018 saw a record 3,372 transactions per second  on Cybersource, and more than 100 million transactions were recorded in 27 hours on Cyber Monday2. One of the most important criteria when choosing a payment platform is how well it will stand up to increased sales transactions. It doesn’t take much imagination to understand the impact that technical hitches and breakdowns can have—even just a few hours down time can result in a loss of millions of euros for retailers, a disaster for yearly turnover figures. Reputations suffer as consumers simply discard items in their basket and turn to other eCommerce retailers. It is therefore sensible to check the actual availability rate and capacity of payment providers during these increased transaction periods.

The “code freeze” period 

Implementing a "code freeze" period to limit the risk of platform performance issues is also strongly recommended. This entails freezing computer system updates, especially during promotional events, to prevent any unexpected surprises which can sometimes occur when introducing new versions of a computer program. To ensure the stability of our platforms, we ourselves implement a freeze period from October to January as we understand that this year-end peak period is a crucial time for our customers. We continue development work to improve our services, but any updates are not rolled out until after peak season.  

Fighting fraud through manual review 

One of the most delicate operations for retailer teams is making sure that transactions for legitimate customers go through smoothly while at the same time ensuring that fraudulent activity is blocked. It’s not always easy to formally categorize these transactions and many of them need to be reviewed manually. It is extremely important for retailers to adopt a well-honed anti-fraud strategy to reduce this risk because during peak transaction periods fraud rates can increase significantly. And bear in mind that the rejection of a genuine transaction can lead to customers abandoning their purchases which inevitably has a knock-on effect on a retailer’s turnover figures.

Retailers therefore should to anticipate these peak activity periods in advance and revise manual review team staffing levels accordingly (which may be internally and / or outsourced) to ensure 24/7 coverage.

Working toward “friction-free” payment 

  • The European Banking Authority has granted an additional 15 months to complete the migration to SCA (Strong Customer Authentication). 
  • SCA was due to be enforced on 14 September, however, in June the EBA granted supervisory flexibility to local regulators if PSPs set up migration plans in recognition of the complexity of the requirements and the lack of industry readiness. 
  • The EBA expects that PSPs’ (Payments Service Providers) migration plans should be completed by 31 December 2020. This includes time for merchants to implement and test SCA. 

“Soft decline”

Indeed, the next step will take place from March 31, 2020, with "soft decline". From this date onwards, banks will reject all transactions over 500 euros, and any transactions deemed to be risky, should the consumer not have been previously identified by a strong authentication method. It is therefore paramount that retailers investigate how they may customize the customer experience to make it as fluid as possible.

To conclude, on the eve of the festivities and in the perspective of a Post SCA’s World, retailers must adopt and optimize a robust anti-fraud strategy. After all, their fraud rate—and that of their bank—will be the key determining factor in whether the issuing bank requires them to satisfy SCA criteria for any transaction higher than 30 euros.