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What does SCA mean for recurring payments?

If you’re a merchant based in the European Economic Area (EEA), you might already be aware of Strong Customer Authentication (SCA). If you’re not, we’ve written a brief overview of what the new European PSD2 law means for subscription businesses. In a nutshell:

  • SCA is part of European PSD2 regulations, which aim to increase the security of electronic payments and account management, as well as reduce payment fraud
  • SCA comes into effect on 14 September 2019
  • If your business uses a European payment provider to serve customers within the EEA, SCA requires additional proof of identity from your customers when they make certain types of payments

Many businesses are concerned that the extra security measures posed by SCA will increase friction at checkout, leading to a drop-off in conversion. For businesses that take recurring payments, there are broadly three major factors that determine how SCA will affect you. And there are a number of exemptions and out of scope transactions that could help minimise impact on conversion rates.

Ahmed Badr, General Counsel at GoCardless, explores these areas in the videos below, as well as recommending the next steps businesses should take.

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The complete guide to SCA
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DocuSign expands payment offerings in Europe with GoCardless

DocuSign chooses GoCardless as its global Direct Debit provider

We’re delighted to welcome DocuSign Inc as a new customer – and one of a growing number of SaaS businesses choosing GoCardless to power their global subscription payments.

DocuSign helps organisations connect and automate how they prepare, sign, act on, and manage agreements. Its customers will now be able to subscribe using GoCardless, as an alternative to credit/debit cards and PayPal.

“We want our global customers to have access to simple and easy payment methods when purchasing DocuSign,” said Robin Joy, SVP of Digital, Demand & Web Sales at DocuSign.

“We’re delighted to be working with GoCardless to offer Bank Debit as a payment option throughout the UK and Europe, to ensure customers are able to complete quick and easy transactions with DocuSign.”

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Recurring payment preferences 2019
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SCA: What the new European PSD2 law means for subscription businesses

What is SCA regulation?

For the most up-to-date analysis and guide to SCA, view The complete guide to SCA for businesses

In September 2019, Strong Customer Authentication (SCA), a new regulation for authenticating online payments, will be rolled out across Europe, as part of the Second Payment Services Directive (PDS2).

One of the key aims of SCA is to reduce the incidence of payer fraud and increase security, by introducing two-factor authentication on electronic payments.

Learn more about how SCA works.

What kind of transactions are affected by SCA?

SCA comes into force on 14 September 2019, and will affect any applicable transaction for businesses whose payment service provider is located within the European Economic Area (EEA) and whose customer's bank or card provider is also located within the EEA. If only one of those parties is located within the EEA, the requirement is for them to still use 'best efforts' to apply SCA.

(Note: The FCA released a statement on 28 June 2019 recognising concerns around the industry's preparedness and ability to comply with the requirements for SCA by 14 September 2019.)

SCA does not apply to GoCardless’ Direct Debit payments service. GoCardless is fully PSD2 compliant, and SCA does not apply to payments made through GoCardless as it uses 'paperless' Direct Debit mandates, which are out of scope of SCA.

So, what transactions are affected by SCA?

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The complete guide to SCA
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How will online shoppers react to new PSD2 security rules?

Today, we released research from a GoCardless survey into consumer attitudes around security and convenience when buying online.

The findings show that UK consumers are torn between valuing convenience and security when making purchases online – but they value “speed and ease of payment” more than their European counterparts.

The GoCardless study, 'Security vs convenience in the payment experience', asked 4000 consumers in the UK, France, Germany and Spain, about their attitudes and behaviours to online shopping, and found that:

  • Nearly half of UK consumers (43%) consider “speed and ease of payment” the most important factor when paying for something online, compared to one third in France (32%) and Germany (33%) and less than a fifth in Spain (17%).
  • Shoppers in all markets place high value on a secure checkout process: French shoppers showed the greatest preference for security (62%), followed closely by German (61%), Spanish (58%) and UK (55%).

The research is published ahead of the introduction of Strong Customer Authentication (SCA); a new, European-wide, two-stage verification process coming into force from September 2019 as part of PSD2.

(Note: The FCA released a statement on 28 June 2019 recognising concerns around the industry's preparedness and ability to comply with the requirements for SCA by 14 September 2019.)

As a result, shoppers will have to provide two sets of security information – that could be a password or PIN, biometric information, or device information like a mobile number – to authenticate an online purchase.

How will consumers react to the new rules?

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Security vs convenience at checkout
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GDPR one year on: 5 things we’ve learned about scaling a privacy programme

Remember when GDPR was coming into effect last year, and every organisation we’d ever had contact with decided to send an email?

Some asked for our consent, some just checked in. More knowledgeable companies, or those who had taken good advice, didn’t email at all, trusting that solid privacy practices in the lead-up to GDPR made it unnecessary.

At the time, we shared details of our privacy programme; one year on, we’ve had a chance to experiment. We’ve learned some of what works, and what doesn’t. And regulatory guidance, events and enforcement have started to shed light on what good looks like for GDPR.

Yet the discussion at every privacy event I’ve attended in the last year, and every panel I’ve spoken on, inevitably turns to one topic...

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GoCardless and GDPR
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What is Strong Customer Authentication? (in 2 mins)

What is Strong Customer Authentication (SCA) and what does it mean for merchants in the UK and Europe?

If you haven’t heard of it yet, you wouldn’t be in the minority - Mastercard’s survey of European merchants in late 2018 found that 75% were unaware of what SCA is and what it means for them. As it stands, however, SCA will be coming into effect in September 2019 and it poses significant changes to the security requirements of online purchases.

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The complete guide to SCA
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How do consumers prefer to pay for recurring purchases in 2019?

How do consumers want to pay for subscriptions, memberships, bills and instalment plans? The answer to this question can hold the key to conversion rate optimisation for businesses. Knowing which payment methods your customers are comfortable with, and which they actively prefer to pay with, can have a significant impact on revenue generation for businesses taking recurring payments.

We partnered with YouGov to ask 12,785 consumers across the UK, France, Germany, Spain, Denmark, Sweden, USA, Canada, Australia, and New Zealand what their payment preferences are in 2019. The research covers four typical recurring purchase use cases: traditional subscriptions, online subscriptions, household bills, and instalments. Together, these markets represent more than two-thirds of the world’s recurring payment volume.

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FAQ Friday – How can you improve your accounts receivable process?

Accounts receivable. We’ve all heard the term before, but if you’re not part of a finance team, it can be tough to fully understand what impact it will have on your cash flow and the health of your business.

In this week’s FAQ Friday, we break down exactly what accounts receivable means, why it’s really important and share a few tips on how you can improve it to benefit your payment collection and overall cash flow.

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Optimise your accounts receivable
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