E-commerce shoppers have been promised a frictionless checkout for years, but new moves by the card schemes will take South African consumers a step closer. Soon, local merchants will be able to offer online shoppers a faster checkout experience giving them a seamless experience, much like the ones already available on Amazon and other global marketplaces.
“South Africa is globally recognised for its sophisticated banking sector. However, payments still suffer a good deal of friction to ensure more secure experiences. Visa and Mastercard’s new standards will soon be rolled out with the express purpose of significantly reducing unnecessary payment friction while still ensuring customer security,” explains Elizabeth Graham, Product Manager of Payments at Entersekt, a global leader in customer and payment authentication solutions for financial fraud prevention.
Visa’s Digital Authentication Framework (DAF) and Mastercard’s Token Authentication Framework (TAF) programmes aim to improve transaction rates and reduce the friction of card-not-present (CNP) transactions. The reduction in step-up challenges will result in a better user experience for shoppers.
“Overall, it is the way the industry would like to move. Our goal has always been to get our customers through the checkout process as quickly as possible. Unlike the US, South African consumers are used to step-up authentication, and the removal of challenges might be a very welcome change for them – especially those who are used to shopping on international sites where faster checkout is the norm,” Graham explains.
Liability changes add some complexity
Visa’s DAF programme came into effect on 15 April 2023 and will be mandated for all issuers who will be auto-enrolled in the programme. Mastercard’s TAF only comes into effect in 2024 and it is not yet clear if it will also be mandated.
In communications with the industry, Visa has made it clear that once a cardholder has been authenticated on a merchant’s platform, future authorisation processes must follow the DAF procedure. Visa has also shared that issuers “are not allowed to request a step-up or challenge on subsequent authentication requests from the same merchant, customer, and payment account that meet the DAF requirements”.
The other big shift is that Visa has made issuers liable for fraud on authenticated transactions that meet DAF requirements.
Mastercard’s TAF, however, has kept merchants liable for fraud, although it has announced that merchants in some (as yet unannounced) regions may be eligible for fraud liability protection.
“We will be working closely with issuers with our risk-based authentication and running records. Our ACS processes hundreds of real-time data points within split seconds, so if there is a dispute at least they will have records to show that their systems picked up a risky transaction. It is, however, likely that there will be some adjustments after the programme goes live and the industry must keep sharing experiences so improvements can be made,” Graham says.
Merchants should act sooner rather than later
Merchants can enrol for either the DAF or TAF programme. Cardholders, meanwhile, will see a screen advising them that after an initial authentication, all future transactions will go through frictionlessly when shopping again at the same merchant and using the same card.
“Larger merchants will likely be the first to take advantage of the programme and then news of its benefits will filter down to the smaller ones. But those who do choose to be early adopters would certainly enjoy an immediate boost to their customer experience when they offer faster checkout, which could translate into a nice competitive advantage,” Graham shares.