Only 1 in 3 travel merchants expected to be SCA-ready: report

9th September, 2019

The travel industry at large isn’t ready for the implementation of Strong Customer Authentication (SCA), required for all online transactions in Europe from 14 September 2019.


A study initiated by Amadeus has indicated that only one in three travel merchants are expected to be SCA-ready by the deadline. The report featured 50 large travel firms (€1billion+ revenue).

Merchants will have to adapt to SCA, which aims to increase payment security and protect sensitive consumer payment data. The preparedness of the travel e-commerce sector in dealing with the anticipated negative impact is being assessed since SCA poses risks for travel merchants, not to mention implementation challenges. This requirement is being introduced as part of the second Payment Services Directive (PSD2).

A couple of issues that have been highlighted in Amadeus’ report, ‘Strong Customer Authentication in travel payments: preparing for two-factor authentication’ are: 

  • Cart abandonment: Uneasiness and apprehensions being associated with SCA are valid as travel merchants dread the idea of adding any sort friction to a transaction process. SCA stipulates all electronic payments in Europe be subject to 2-factor authentication, meaning travellers must undertake extra steps to validate the transaction before payment is accepted.

The SCA requirements are going to impact the speed of consumer transactions and the number of steps to be completed when paying. One of the major concerns has been the inclusion of additional authentication into the checkout flow, since it introduces an extra step that can add friction and increase customer drop-off.

If one considers the growing prowess of mobile devices for shopping in general, it means that there could be even larger customer drop-off. So is the impact of SCA likely to be even higher on mobile devices?  

“…requiring travellers to undergo additional checks, such as providing a one-time passcode sent to their mobile device, introduces some friction to the digital experience. This may sound like a small price to pay but our research shows the industry expects this additional friction to increase abandonment rates by 10-20%,” mentioned Jean-Christophe Lacour, Head of Merchant Services, Payments, Amadeus. The company expects any drop in abandonment rates to be a short-lived phenomenon as travellers get accustomed to the new steps needed, which they’re actually already performing for mobile banking for example.

  • Applying SCA: The report also mentioned that card issuers “are responsible for applying SCA to a particular transaction, yet many other players including acquirers and merchants themselves must upgrade systems so they are capable of handling 2-factor authentication. If that doesn’t happen, and an issuer therefore cannot request a traveller performs SCA, they may simply reject the payment”.

Much to the relief of the industry, many local regulators across Europe have introduced a grace period for SCA compliance for e-commerce transactions over recent weeks.

  • Being ready for it: The top three authentication methods being studied by issuers include; One Time Passwords (OTP) (SMS to a mobile device), authentication within a mobile banking app, and 3DS. Among these, OTP and 3DS authentication are expected to adversely impact the user experience.

According to the report: “…with 65% of airlines and agents expecting SCA to negatively impact sales, how travel companies prepare has implications for the bottom line. There are steps firms can take to mitigate the impact of SCA, with 70% of respondents to our research intending to work with their acquirer and payments partners to apply the various exemptions provided for within the regulation and more than half signalling a move to the latest authentication technology (3D Secure 2.X).”

Specialists recommend that merchants should use exemptions where possible.

Also, by using fingerprints or facial recognition, one can combat fraud while also increasing convenience for consumers.  

Amadeus surveyed payments leaders from 50 large travel merchants regarding their approach to achieving SCA readiness. The majority of responding organizations generate more than €1 billion in annual revenue with respondents drawn from airlines (60%) travel sellers (30%) and hotels (10%). The survey was carried out in August 2019 with industry conference and media company ‘Airline Information’ providing support with respondent recruitment.

Related articles:

Businesses not ready for SCA, worried about impact on UX: report

Optimizing UX for transactions being “challenged” under 3DS 2.0