With the increasing migration over to Payment Services Directive (PSD2), "soft declines" are gradually being implemented. Through this process, the buyer's issuing bank rejects transactions for which the client has not been subject to 3D Secure strong authentication. Since 1 October 2020, in France soft declines have been a mandatory process for transactions in excess of €2,0001. However, what is less well known is that issuers can also activate it if there is a suspicion of fraud, regardless of the transaction amount.
Soft declines are yet to be fully mastered in France
In November 2020, regardless of their amount, an average of 3%* of transactions were soft declined by issuers. 81%* of soft declines issued involved transactions of less than €250, according to BPCE, which issues 20% of French cards: 98.5%** of its November's card transactions that were soft declined were not then retried by the acquirers. A "retry" re-submits the rejected transaction, by directly including the 3D Secure authentication. As a result, for e-commerce merchants, virtually all of these transactions are then lost.
Automatic retries by Dalenys on 100% of soft declined transactions
Dalenys has developed an automatic "retry" mechanism that fully complies with regulations, enabling an immediate response in the event of a soft decline. 100% of soft declined transactions are re-submitted by Dalenys using 3D Secure. The buyer may be unaware of this, as they are immediately given the opportunity to authenticate their transaction.
There are currently very clear benefits. On average among acquirers, just 1.5%** of soft declined transactions are retried, on transactions observed by BPCE. Whereas, for merchants clients of Dalenys, an automatic retry is applied to 100% of soft declined transactions, regardless of the transaction amount. The average acceptance rate of these transactions is 76.5%. This accounts for a significant gain, for some retailers even amounting to several million euros. The stakes are high: the gradual introduction of soft declines will come into effect for all transactions as of next April.
To learn more about PSD2 and soft declines, you can also download the white paper: The keys to reconciling compliance and a smooth customer experience
* Transactions processed by Dalenys. Source: Dalenys Analytics
Transactions analysed against this data exclude transactions outside the scope of the PSD2 (MIT – MOTO and error codes 20 and 28)
** Transactions observed by BPCE. Source: BPCE data, covering all card transactions issued by the Group, i.e. 20% of transactions conducted in France.
1 to see the upcoming soft decline deadlines across Europe, please visit our website.