SCA exemption strategy starts with taking back control of your checkout data
Strong Customer Authentication was designed to reduce fraud, but for online merchants it introduced a new conversion problem: authentication drop-off. The friction inserted by 3DS flows, whether full challenges or silent failures, does not show up neatly in standard PSP dashboards. That gap in visibility is where revenue quietly disappears.
Research from Forter, cited in context of the UK’s 2022 PSD2 go-live, estimated that merchants applying 3DS to all transactions risk losing 8 to 10% of revenue through a combination of authentication failure and authorisation failure. For Dutch and Belgian merchants, who have been operating under PSD2 since 2020, these figures are not hypothetical. They are already baked into current conversion rates, often without merchants realising it.
The structural problem is a data imbalance. PSPs see payment-level events. Merchants see customer-level behaviour. Neither sees the full picture alone. When a PSP reports a 25% decline rate, a merchant without independent data benchmarks has no basis to assess whether that is acceptable, fixable, or a sign of a misconfigured exemption strategy. The merchant ends up accepting “good enough” when better is achievable.
Critically, most merchant analytics cannot distinguish between voluntary cart abandonment and 3DS technical failure. These are very different problems requiring very different responses, yet they get lumped together in the same funnel drop-off metric. Until merchants invest in more granular event tracking at the checkout and payment layer, they cannot build a credible SCA exemption strategy or hold their PSP accountable for authorisation performance.
The practical implication for merchants is this: before optimising your SCA exemption requests, transaction risk analysis scoring, or 3DS method configuration, build the internal data foundation that lets you verify outcomes independently. That means tracking authentication attempts, challenge rates, and abandonment events at a transaction level, not just monitoring overall conversion. Only then can the conversation with your PSP move from reporting to genuine optimisation.
Source: finextra.com
