strong customer authentication
strong customer authentication
Strong Customer
Authentication
– what does this mean for vending machines
and kiosk businesses
Vending operators are facing some
major changes to the way they
operate thanks to new legislation
which came into effect in March
and could result in a loss of revenue
if vending and kiosk businesses
don’t act.
New Strong Customer Authentication (SCA) legislation, which
came into effect across the UK and Europe on March 14,
2020, means that anyone making a fifth transaction – or when
a cumulative spending amount of £150 on their credit or
debit card, or £100 within 24 hours, whichever comes sooner
– will not be able to simply ‘tap and go’ with a contactless
terminal. Instead, they will have to provide another means of
identification, normally the PIN for the card.
Although some sectors such as travel, parking, electricvehicle
charging and charitable donations are excluded from
this legislation, the majority of vending machines and kiosk
businesses are to be affected.
contactless only payment terminal will
need to be upgraded to ensure twofactor
authentication is possible.
The aim of the new rules is to reduce
the amount of card fraud across Europe,
which in the UK alone in 2018 reached
£671.4m, 19% higher than the previous
year according to data from UK Finance.
What are the risks of
not complying?
The beauty of contactless payments
is that they present a quick, easy and
frictionless means of retailers and
customers interacting. But the SCA
rules purposely introduce an element of
friction designed to prevent fraud. While
payment services companies are working
towards enabling these payments to
be made with the minimum of friction
possible, the requirement for another
form of ID and the ability to fall forward
to chip and pin cannot be avoided.
The specific problem for vending
machine and kiosk businesses is that
without upgrading to allow these
additional methods of identification,
there is a chance you will see complaints
to the sites where they are located.
The buyer may assume your machine
or kiosk doesn’t work, resulting in it
being considered ‘out of order’. For the
business, this would mean no longer
generating revenue and potentially
creating additional costs by unnecessarily
sending out an engineer.
How is this affecting the market?
Around 3.6 billion products are
vended each year at an annual market
turnover of around £1.46 billion, so
even a small drop off in the number of
transactions because of payment friction
could be costly. Moreover, operators also
see an increase in transaction spend of
30% when using cards, representing 23%
uplift vs cash.
In fact, we are already seeing
significant moves towards vending from
luxury brands and even big high-street
names as they increasingly see the
benefits of dealing with their customers
through vending experiences and kiosks
over person-to-person interaction. Using
vending as a medium for sales means
many luxury brands and designers for
example, can cut out the middle-man
and be more prescriptive about the
customer experience they deliver.
The luxury brands are keen to
operate in areas with high footfall such
as airports, with vending reducing overall
costs including staffing and retail space.
This allows them to control the entire
process from the way the items are
presented, through the experience of
interacting with their brand in situ and
how customers are then able to access
the items once they have made their
choice.
The need to use technology that
allows the SCA regulations to be
complied with and ensure no loss of
sales is even more vital for highervalue
sales. If you lose a customer on
a low-value sale it is annoying but not
necessarily so damaging. But for a highvalue
vendor it is much more costly in a
number of ways.
What do businesses need to do?
Businesses in all the affected
vending and kiosk sectors need to act
to ensure they don’t fall foul of the
rules or lose sales because customers
cannot provide additional SCA details on
purely contactless terminals. There are
solutions in the market that allow for the
simple changing and upgrading of the
payment points from just contactless
to ones that prompt for additional
information to be compliant with SCA.
So, your business really cannot afford
not to upgrade. Once you know the
overall cost to your business to make the
necessary changes to payment terminals,
you can make the decision to move
forward and avoid potentially costly fines
and loss of revenue. n
By Paul Weston,
Head of Merchant Payment Acceptance,
Worldline UK & I
Why is it important to act now?
The importance of acting now cannot be overstated.
Business owners must ensure vending machines and kiosks
have been upgraded to allow the contactless payment to fall
forward to chip and pin to allow customers to complete the
transaction. The AVA confirmed that as of 2018, there were
412m unattended machines in the UK, from traditional vending
machines to hot drink machines. Any of these that have a
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KIOSK solutions 33