Stripe acquires Touchtech Payments for SCA compliance
Payments company Stripe has acquired a Dublin-based tech company called Touchtech Payments, intending to address the Strong Customer Authentication (SCA) standards going live on 14 September 2019.
Touchtech Payments provides advanced SCA-ready authentication technology for Europe’s fintechs and challenger banks, like N26, Transferwise, and many others.
By providing advanced authentication technology for credit card issuers, Touchtech Payments helps them offer better payments experiences for their customers, without having to choose between security and user experience.
More than 300 million European consumers will need to confirm their identity for the majority of their online purchases, using two of the following: something they know (e.g., a password), possess (e.g., a phone), or are (e.g., their fingerprint).
European online merchants will have to upgrade their payments set-up to prepare for the upcoming regulation. If they don’t, their transactions will be declined outright.
“On the modern internet, payments should be everything you’d expect: easy, secure, and fully compliant with the latest regulations,” says Will Gaybrick, Stripe’s chief product officer. “Unfortunately, these three attributes are often at odds with one another, making it nearly impossible for an individual business to keep pace with regulatory changes and build a great payments product experience for their customers.”
When similar regulation was enforced in India in 2014, some businesses reported an overnight conversion drop of over 25%, due to the extra step in the payments experience, says Stripe.
While European regulators created a number of SCA exemptions for low-risk, most merchants will simply not be able to leverage them on their own.
“SCA is a ticking time bomb for the European payments industry. Merchants must deal with a complex set of changes to the payment flow that can have a disruptive impact on the customer experience. Yet, awareness among merchants is low,” says Ron van Wezel, senior analyst at Aite
He adds: “Payment service providers are at a turning point. SCA is simply too complex for any merchant to manage on its own, including for large online businesses. Payments providers who can abstract away SCA complexity will have a significant advantage over their competitors.”
Stripe says it is launching products to make the transition to SCA as seamless as possible for online businesses, including: Payment Intents API, Checkout, Billing, and Dynamic support for SCA exemptions on low-risk transactions.
To help merchants navigate the complexity of SCA, in addition to the new and updated integration products, Stripe is launching SCA guides, SCA-ready payments flow designs, SCA-ready API documentation, and SCA webinars.