13/10/2020 Risk management
Christian Rautenberg

2-factor authentication (2FA) – motivation to abandon a purchase?

The other day in a shop in the pedestrian zone – I put my clothes on the counter and pulled out my credit card – the friendly saleswoman asked me for my PIN number for my credit card… which PIN number? For the credit card I have been using for 20 years – without PIN! – and therefore I had banned the PIN number from my memory 19.8 years ago? OK, I paid by EC card, that’s fine. A few days later, same pedestrian zone, different shop – and again I am asked for the PIN. Damn it!

So I look forward to a letter from my bank – no, no new PIN, I have to apply for it first – but a note telling me that I have to register/activate my credit card for online orders. In the end that was quite simple – well, not badly done.

Now I’m already professionally active in the field of credit and risk management, not in payment, but the whole thing is not really foreign to me. And suddenly the PSD2 and the associated 2-factor authentication hit me. Even for me, many questions arise. Sure, you can read everything somewhere and still do your shopping. But it is tedious and time-consuming.

The challenges in online business.

Then there may be many (online) shoppers who don’t want to deal with it at all… not to mention online shops that are forced to put the 2FA on the table even though their focus is on completely different topics.

The challenges in online business are well known:

  • Procuring and selling goods – this is probably the most fun, because in the end it is the core of the business
  • Customer management – yes, customers are also a lot of fun
  • Data protection according to DSGVO – whoa, really now?
  • Payment – purchase on account vs. service provider vs. open invoices …
  • Low margins – the fun curve has limits!

And now? The summer is coming to an end. It will be September. The PSD2 and the great ideas are really picking up speed… autumn and the Christmas trade can come.

When it comes!

But what is the solution?

What happens when online shops can no longer offer “convenience”? What happens if the number of abandoned purchases increases and thus the turnover decreases? It is certainly not because of the goods, the great website, the promotions or offers!

There is a risk that customers will abandon purchases because online shopping becomes more complicated – if the online shop & payment systems are not adapted to this challenge. And one more short question is allowed: How often do I try the purchase again on other days if it didn’t work before? A scoundrel who thinks badly of it if customer loyalty is lost!

Of course, there will be correspondingly good solution proposals on the side of various payment service providers! Even on TV I have already seen advertisements in which the possibility of buying on account was advertised. So the payment side continues to meander towards service providers including the dependencies associated with it. If the external payment costs have dropped recently, this may also settle down again.

One option for the online shop would be to increasingly control the payment side independently again! Taking the strengthening of the German’s favourite payment method – buying on account – into your own hands and managing the associated risks: Avoiding aborted purchases, securing year-end business, increasing customer satisfaction!

What is the next step?

Will the coming months be dominated by frustrated online merchants and customers? How will online merchants get the 2FA challenge under control? How can secure invoice purchases be offered and still ensure an uncomplicated checkout? We give answers!