Stripe has announced the launch of a delegated authentication solution to improve payment conversion rates in Europe. The companies that use the financial infrastructure platform they will be able to have their customers authenticate their purchases without exiting the checkout process.
wise is the first card issuer to implement this feature. As a result, Wise cardholders will no longer be redirected to their app to authenticate their purchases at the millions of businesses that use Stripe. Instead, they will be able to use any biometric authentication method that the device they are on supports. They will never have to leave the payment process.
We are delighted that Wise customers will be the first to benefit from this new technology. It makes your life so much easier when shopping online, whether ordering takeout or shopping through TikTok. We are proud to work with Stripe to resolve this issue together.
Erik Kaju, director of platform and expenses at Wise.
SCA-Related Frictions Lead to Major Payment Failures
Strong Customer Authentication (SCA) is an EU regulation that has been fully implemented this year to reduce payment fraud. From now on, issuers must proceed with two-step authentication to prove that the buyer is who they say they are. If fraud occurs, the issuing bank is responsible and the company is not exposed.
The SCA has reduced fraud, but also legitimate economic activity. Visa estimates that transactions that comply with strong authentication have seen an 11% drop in conversion rates . This is because shoppers have to switch between different apps when checking out.
Delegated authentication increases payment conversion
The delegated authentication feature embeds biometric authentication into the merchant checkout process, shifting the responsibility of authenticating transactions from card issuers to Stripe. Working in the backend, Stripe dynamically adapts two-factor authentication methods to fit the shopper’s preferences and device capabilities. iPhone users, for example, may have the option to authenticate with Face ID.
As a result, buyers are no longer redirected away from the checkout page in the middle of a purchase, while sellers are still protected from fraud.
“Every euro counts, and Stripe is very focused on maximizing revenue for its users. Our delegated authentication feature is a powerful tool to increase payment conversion for businesses using Stripe, which translates into more money for their revenue without them having to lift a finger. If we take into account all the transactions contemplated by the SCA, this could save companies billions every year”it states Matt Henderson, Head of EMEA Business at Stripe.
Companies like TikTok, Nando’s and Deliveroo already allow Stripe delegated authentication when paying with Wise cards. The authentication process is four times faster than when buyers are redirected to their banking app or sent a unique access code.