Managing customer authentication when paying online was a process that e-retailers had direct control over before the Payment Services Directive 2 (PSD2). They were autonomous in their strategy to find the right balance between conversion and security.
Since 2019, the cards have been reshuffled with the full application of PSD2:
- All transactions must be authenticated (except for exemption cases);
- The authentication can be strong (the buyer must identify himself) or frictionless (the authentication is transparent for the customer thanks to the data transmitted by your payment solution);
- The decision of applying strong or frictionless authentication is up to the issuing banks.
You should also be aware that as of October 15, 2022, card schemes no longer support 3D Secure v1: any transaction sent for authentication with this version will result in an error.
If left unchecked, all these changes can impact your payment performance and therefore your conversion. One way to avoid this is to recover failed transactions with the Smart Retry tool.
What impact do declines have on your performance?
Any transaction that is not authenticated and not justified by an exemption request will be declined by the issuer. However, the sale is not lost since the merchant is given another chance to replay the transaction with strong authentication, so that it’s accepted by the issuer.
In practice, the transaction is not categorically refused, and it can go back to the previous step: authentication.
Although this double step may seem long, it’s not. Retry technologies, such as Payplug’s Smart Retry, allow the transaction to be re-routed to the authentication flow, transparently and almost instantaneously for the end-user. Therefore, he is not aware that the transaction has been declined: it’s an automatic and seamless retry.
Between 2020 and 2022, more than one billion euros have been saved by the implementation of this feature among our merchants.
What are the latest developments in Smart Retry?
Although it’s in force throughout Europe, the application of PSD2 has been progressive, with different rhythms according to the country, thus generating some pitfalls. The use of strong authentication, which is not similar from one country to another, as well as the integration of the 3DS v2 protocol, have made some markets unstable.
The authentication servers that enable the 3D Secure to function properly are also experiencing instabilities that can cause payment failures. For example, in the 1st semester of 2022, the error rate on the 3DS v2 was 11.55%.
All these situations lead to a risk of permanently losing transactions, which means a loss of turnover for e-commerce businesses. Therefore, retry technologies, which were initially intended for use in the case of issuer rejection, are now allowed to avoid a break in the customer journey.
Payplug's Smart Retry now allows you to replay not only transactions that have been declined by the issuer, but also those that have failed for the reasons mentioned above.
By recovering transactions that would have initially failed, you:
- avoid losing transactions;
- mechanically increase your acceptance rate;
- maintain a seamless experience for your customers.
If you want customised advice on how to optimise your payment performance, please feel free to contact our teams:
1Payplug (ex Dalenys), June 2022
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About the author
Roxane produces content about trends, innovations and events related to retail. She shares her advice with merchants who want to develop their business.