As PSD2 measures are adopted across the EU, SCA will likely reduce card-not-present fraud in intra-European transactions. But SCA is certainly not fraud-proof. Fraudsters have proven themselves resourceful and adaptive. With PSD2 presumably making their lives harder, they will try to exploit whatever they perceive to be the weakest link.
While fraudsters are busy finding ways around the new safeguards, forward-looking merchants are already working on updating their fraud prevention strategies in order to offset the impact of PSD2 on fraud MOs. By doing so, they stand to benefit from the clear incentives the regulation sets for merchants with low fraud rates.
This report takes a deep dive into the dark web to surface fraudsters’ response to the new regulation. It highlights the incentives offered for merchants able to maintain low fraud rates under PSD2. Finally, it examines the excessive friction paradox with a first-of-its-kind quantitative analysis and provides a clear suggestion for revising the TRA exemption thresholds