Posted by Bharat Nahar, Partner
Assessing the impact of new anti-fraud rules for online retailers
New EU anti-fraud rules, which will come into force from September, will require most online payments of more than £27 – or €30 – to go through an extra level of verification such as entering a code received a text message.
The new rules have had a negative reception. While the move is designed to protect consumers and online sellers after fraud in the EU reached £309m in 2016, concern has been expressed about the disruption it will cause. Some of Europe’s big banks have warned that more than a quarter of online payments will be impossible to complete because of a lack of preparedness.
The British Retail Consortium estimates that 75% of retailers are unaware this is coming into effect, with the same being true for many consumers. The news comes at a time when a seamless path to purchases has never been so important for online shoppers. The potential impact for brands is huge: 47% of consumers will leave a brand due to a poor online experience. The business minister Kelly Tolhurst has promised that the Financial Conduct Authority is working to reduce its impact past the September deadline.
It remains to be seen what the cost will be for retailers and only time will tell about the potential effect on high street shops. You can’t help but think of the postcode lottery factor too, in terms of mobile signal. Latest data shows Stockport has the worst signal in Britain while York has the best. What will be the impact with this?
Perhaps the Government will bow to demands that no enforcement action is taken for at least 18 months to give retailers time to adjust.
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