66 percent of companies from travel industry not ready for SCA deadline

Friday 30 October 2020 08:49 CET | News

A new research conducted by Amadeus has found that COVID-19 related delays have set SCA implementations back by an average of six months for airlines, hotels, and travel agencies.

The way online payments are made in Europe will enter a new era from 31 December 2020 as the Strong Customer Authentication (SCA) requirements of the Payments Services Directive II come into force. However, the new payments rules are set to be introduced at a time when the travel industry is already working hard to mitigate the impact of COVID-19. 

Travel technology company Amadeus has conducted a research to understand the readiness of the industry for SCA. According to the research, carried out with payments experts from 60 travel companies (airlines, hotels, travel agencies) between June and October 2020, only one third of travel firms expect to be ready to apply SCA checks across all sales channels in time for the 31 December deadline, with a further quarter likely to be ready in the first half of 2021. It appears that some travel firms may have been caught out as a significant majority had expected SCA to be delayed still further, perhaps due to the impact caused by COVID-19. 

When asked about the biggest challenges to SCA readiness, 65% of firms cited the COVID-19 pandemic and 55% a lack of internal resources. On average, the research suggests that the pandemic has set SCA programmes back by around six months in travel. This appears to have been a substantial blow when the industry was already struggling to meet the new requirements. However, a great deal of progress has been made recently:  with the new 3DS 2 authentication protocol now available, the industry can at last access the function rich technology it needs to deliver SCA in a wide variety of scenarios. 

Amadeus developed a Strong Customer Authentication action plan to help travel players prepare for this change, making a number of recommendations for travel payments professionals:

  • map specific payment flows – the starting point for SCA in travel is to understand and map different payment flows, including payments and technical intermediaries that will likely be required to upgrade systems to make SCA happen; 

  • migrate to 3DS 2 – for ecommerce payments it’s recommended that travel companies move their direct channels to the latest industry authentication protocol, 3DS 2, which helps prevent fraud whilst protecting the customer experience; 

  • understand use cases – planning for SCA in travel requires travel agents and suppliers to plot their specific use cases in advance to facilitate key decision making, such as whether a travel agent should become the ‘merchant of record’ or pass the payment to the travel supplier to process; 

  • plan for Merchant Initiated Transactions (MITs) – these transactions are critical in travel, allowing the traveller’s card to be charged for cancellations, hotel mini bar, or pay by instalment plans when the traveller is not present; SCA requires travel suppliers and travel agents to present clear T&Cs at the time of booking as well as ensuring proof of SCA so MITs can be initiated later in the travel experience; 

  • collaborate to benefit from exemptions – there are a number of exemptions that promise to ease the impact of SCA in travel, for example, the Secure Corporate Payment exemption; travel payments professionals will need to collaborate with payments, technology, and distribution partners to maximise the application of exemptions.

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: Amadeus, research, COVID-19, merchant, SCA implementation, airlines, travel agencies, travel industry, Strong Customer Authentication, Payments Services Directive II, ecommerce, Merchant Initiated Transactions
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce

Industry Events