The introduction of the 3D Secure 2.0 (3DS2) protocol for strong customer authentication (SCA) could cost European retailers more than €100bn (US$116.7bn) in online sales in 2021, payments consultancy CMSPI predicts.

SCA aims to reduce credit and debit card fraud but two-factor authentication technology “remains relatively new and unproven” and “adds significant unnecessary friction to the online commerce experience”, the consultancy’s SCA Economic Impact Assessment report concludes.

Testing reveals that 3DS2 adds between one and two minutes to the online checkout process, resulting in 25% of consumers abandoning 3DS2 transactions and 35% of 3DS2 transactions being abandoned, declined or failing because of technical errors, according to CMSPI.

Based on 2019 sales volume, this would result in €108.1bn (US$126.4bn) in lost sales.

Smaller merchants will be particularly affected because they are less likely to have the resources larger retailers can draw on to minimise delays, CMSPI says.

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