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How much does strong authentication cost you in sales? There is an easy fix.

Consumers have a strong preference for app and mobile shopping. This year, new regulation led to an increase in cart abandonment in the payment phase. Delegated authentication can help you to fix the customer experience and regain lost sales.

This strange era has been a boom for online shopping, apps, and contactless self-service – let it be food delivery, taxi trips paid in the app, or other shopping.

We all crave a frictionless payment. For years, the industry-standard has been a swipe to the right. And when there is friction, there is a considerable risk of a no-deal. If the consumers are not in dire need, they don’t have the energy to jump many hoops to finish the payment.

This year, hundreds of millions of European customers noticed a significant change in the services they love: the payment stage was far away from smooth requiring additional OTPs or identification in issuer’s app.

Antti Ojaranta, who leads retail and payment-related operations in Etteplan, has consoled many puzzled merchants in past months.

“Since the implementation of PSD2, I have consulted several merchants frustrated with the situation and willing to restore the customer experience. With certain technical methods, it is possible to authenticate the customer in merchant’s application and make the shopping experience smooth”, says Antti Ojaranta.

Easy fix for a pressing problem

Delegated Authentication is one solution for merchants to take control of the authentication process. Many online merchants already know their customers and use various methods to authenticate them. Delegated Authentication means that merchants can perform strong customer authentication themselves. Most retailers already have the necessary requirements in place because they have extensive information about their customers. This makes it easy to implement a one-click checkout.

“The prerequisites for a seamless mobile payment experience are in place.” says Anders Berggren, responsible for Netcetera’s business development in the Nordics. The company offers software and digitization for payment solutions, for example, for the payment industry. Netcetera makes sure that paying online and in mobile is safe and user-friendly.

“Many merchants already know their customers and have a mechanism to authenticate them. Delegating the authentication to merchants helps to create a frictionless customer experience yielding in more sales”, says Anders Berggren.

Customers have a strong preference for shopping in apps. However, when the payments get challenged in an app, it can be a lot more work for the consumer. In mobile, even a tiny distraction can cause a loss in sales.

Balance between security and convenience

Security and trust are at the core of eCommerce and payments. However, the balance between convenience and safety is vital in creating a secure and smooth customer experience.

“We develop self-service solutions to various domains, and often they include payments. All the hard work for a functional UX or fancy backend robotics won’t help if the final step of paying for the product or service is cumbersome. Therefore, we have actively helped our clients in finding solutions that comply with the regulations without undermining customer experience”, says Antti Ojaranta.

Customer experience is an essential driver of revenue. One in four customers abandons cart due to prolonged or complicated checkout.

European merchants are already rolling out their plans to make their shopping experience as frictionless as possible. According to Netcetera’s poll, 33% of respondents plan to use delegated authentication to restore their customer experience.

“Competition from time, money, and customer attention is tough, and customers are more prone to use services offering a seamless experience. A seamless experience is now a competitive edge, but soon it will be something that customers favor and expect”, says Antti Ojaranta.

So how is it fixed?

  • Most mobile devices support biometrics, which facilitates authentication. Merchants using Card on File based on tokenization (card data permanently stored at the merchant in the form of tokens) already benefit from higher conversion rates and improved user-friendliness while complying to PSD2.
  • As a PSD2-compliant authentication method for merchants, the technology of the FIDO-Alliance (Fast Identity Online) is ideal. If a merchant has securely registered its customers via FIDO, the login to the merchant’s customer account can be used as authentication for payment transactions.
  • FIDO2 will include eID and BankID and get recognized as an authentication factor for the eID standard. As Netcetera’s solutions support FIDO, they can help the Nordics in reaching out to European payment standards. Etteplan can also link customer data to FIDO2 via a cloud service, such as Microsoft Azure, to enable a passwordless customer experience in any application.
  • With the 3DS SDK, merchants can process in-app payments on both Android and iOS smartphones. They can thus offer their customers a seamless checkout process and meet the requirements of strong customer authentication. As a result, this leads to fewer purchase cancellations and higher approval rates and ultimately to higher sales.