Visa Slams EU Banking Rules Which Add Friction to Purchases

Card giant Visa has slammed new European proposals to mandate the addition of extra authentication steps for consumers when they spend more than €10 (£8.50).

Regulator the European Banking Authority (EBA) has accelerated its plans for strong customer authentication (SCA) in a bid to stop growing fraud across the region.

These would include compelling European firms and any e-commerce providers selling into the region to force consumers to authenticate when buying by entering a password or code or using a card reader at the payment stage, Visa said.

It added:

“These steps would be felt most strongly in the UK, however, as UK consumers are the most prolific online shoppers of those markets surveyed – 63% regularly shop online, compared with the European average of 51%.

For UK online shoppers, the changes are likely to lead to more frustration and more cart abandonment. In fact, the [Visa] survey found that over half (52%) of consumers would abandon purchases if more steps were added to the checkout.”

Visa claimed the new proposals would put an end to one-click purchases, made possible when retailers save consumers’ card details, as well as swift in-app payments.

It said the rules could also see consumers shopping on sites outside of Europe that haven’t implemented such measures being declined – something which will hit UK shoppers particularly hard as it said 50% shop online outside the EU.

It could also means longer queues in the physical world at toll booths and the like, where PINs aren’t currently required, Visa claimed.

The final proposed standards will be published on 12 January, but Visa is already ramping up its PR campaign in advance.

“E-commerce has been a European success story in a time of weak overall economic growth but this initiative threatens to slow that growth and reduce the competitiveness of European businesses against competitors from other parts of the globe,” said Visa chief risk officer, Peter Bayley, in a statement.

“All of this inconvenience comes with no evidence that it will actually reduce fraud. We have a system today that works, what we call risk-based authentication. This enables intelligent decisions about whether a particular purchase is low risk taking into account things like the device that’s being used and previous shopping patterns.”

Last week, fraud prevention specialist ThreatMetrix claimed UK retailers would face one million fraud attempts each day in the run-up to Christmas.

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