Riskified Teams Up With Axerve to Help Merchants Manage SCA Compliance

·3 min read

As strong customer authentication, or SCA, requirements are improved under the European Union’s Payment Services Directive, or PSD2, regulations, online payment transactions are more complicated. With SCA, shoppers are required to verify their identity via two-factor authentication.

In response, Riskified Ltd., the fraud management platform, has teamed with Axerve, an Italy-based payments hub, to offer Riskified’s machine learning solutions, which includes PSD2 Optimize, to Axerve’s portfolio of merchants.

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Riskified said in a statement that Kiko Milano, an Axerve client using PSD2 Optimize, “saw an exemption of nearly 99 percent of orders from Strong Customer Authentication using Transaction Risk Analysis, and more than a 10 percent increase in approval rates for transactions.”

Riskified said PSD2 Optimize enables merchants and brands “to minimize the effect of the European Union’s PSD2 regulations on their e-commerce operations by leveraging TRA exemptions to provide a seamless and secure payment experience for legitimate users and low-risk orders, and for the use of 3D Secure payments [or 3DS] to be applied only when it’s necessary.” In short, this means a smoother shopping experience for shoppers and fewer headaches for merchants.

PSD2 was introduced in 2018, and the regulations were revisited in 2021. The goal was to reduce fraud. The regulations apply to all e-commerce sites selling in the E.U. The regulations were implemented when online transactions soared due to the pandemic. And while there’s been a deceleration of the growth of e-commerce, consumers continue to shop online.

Axerve, which works with more than 100,000 customers globally, said their goal “is to simplify complex checkout processes for their clients while guaranteeing high-security standards.” The company said when PSD2 came into force, “e-commerce merchants across Europe immediately felt its effect on the customer journey: friction added to the checkout flow caused shoppers to abandon their carts, which negatively affected conversion rates.”

Kiko Milano, in particular, “experienced a high volume of support tickets from customers complaining they couldn’t complete their purchase,” the company said in a statement. “With almost 70 percent of orders challenged by 3DS accompanied by a high decline rate, they realized they needed a tool to optimize their checkout process and safeguard revenue — while also ensuring full compliance with the regulation.” That’s where Riskified’s solution helped.

Naama Ofek Ard, chief operating officer at Riskified, said when PSD2 was introduced, “we knew that our merchants and partners needed an immediate solution. They needed to comply with the regulation and implement 3D-secure and, at the same time, leverage exemptions in order to improve their customer experience.”

“In order for a merchant to maximize exemptions, they have to perform a transaction risk analysis and identify those low-risk orders,” the chief operating officer said. “And this is exactly the capability that Riskified possesses as we’ve been perfecting this in the last decade. At the end of the day, the goal of everyone involved is to provide higher conversion rates to our merchants and a smooth experience for their customers, and this partnership is a testament to our mission and our capabilities.”

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