The unheard online shopping ticking time bomb

19 Jul 2019
Cllr Robin Ashby

The September introduction of Strong Customer Authentication (SCA) will lead to two-factor authentication for all online purchases. But it's widely unknown. The aim of it is to cut down on fraud and improve digital security - however the Government have failed to support retailers or inform consumers about this significant change.

It is estimated that around 2 million people do not have access to mobile data coverage at some point in their daily activity, which means that they will not be able to complete SCA and online purchases.

Without a delay of enforcement, it is estimated SCA will lead to a failure of 25-30% of e-commerce transactions from this September. The UK is at significant risk as it has a substantial and successful on-line ecommerce business - the largest in Europe.

Commenting, Liberal Democrats business spokesperson in Newcastle Cllr Robin Ashby said:

"The Government are asleep at the wheel in the face of an online shopping time bomb. Ministers have failed to support the retail industry to adapt to these changes, failed to inform consumers and failed to invest in the UK's mobile network infrastructure to support more secure online shopping.

"In the face of the risks and insecurity of a No Deal Brexit, led by Boris Johnson, the last thing that the retail industry needs is to lose 25-30% of e-commerce transactions due to consumers not being able to complete transactions. This Government needs to wake up and act.

"Business and consumers deserve better, and the Liberal Democrats demand better. The Liberal Democrats will continue to provide real opposition to this government in the interests of both those working hard in business and consumers."

Chuka Umunna, the Liberal Democrat Member of Parliament for Streatham and spokesperson for Treasury and business issues, asked a Parliamentary question in BEIS oral questions, 16 July 2019. : What assessment has the Minister made of the effect of two-factor payment authentication on (a) consumers and (b) businesses.


Kelly Tolhurst MP, Minister for Small Business, Consumers and Corporate Responsibility:Thank you, Mr Speaker. The implementation of Strong Customer Authentication, which mandates two-factor authentication for some online payments, will introduce more secure online payments for individuals and businesses. This was introduced by the second Payments Services Directive. The Treasury published an impact assessment on the implementation of the EU Directive in 2017.

Chuka Umunna MP: Mr Speaker, I am staggered the Government is not doing more about this ticking time bomb for online retail which is on track to cause major disruption.

The British Retail Consortium estimates that 75% of retailers are unaware that this is coming into effect in September, and the same is the case with consumers.

And the implementation of this is forecast to lead to the failure of nearly a third of e-commerce transactions from September, due to poor access to a proper phone signal or Wi-Fi. So can I ask the Minister whether she will ensure that no enforcement action will be taken for at least 18 months, to give our retail sector breathing space to adapt to these new rules?


Kelly Tolehurst, Minister: Thank you Mr Speaker, and the hon. Gentleman, I would like to point out that in 2016 there was £309m in fraud in EU commerce, versus £13.6m in 1998. He will know that the European Banking Authority published an opinion, on the readiness and implementation. The FCA published a statement in June. They are working with regards to mitigation past the September implementation. They are working with industry, they are working with providers to make sure the essence of the changes prevail, and that is making it safer for merchants and consumers.

Background info :

  1. Without a delay of enforcement, it is estimated SCA will lead to a failure of 25-30% of e-commerce transactions from this September - Source: UK Finance
  2. Smartphone adoption in the UK is currently estimated to be somewhere between 82% and 89% depending on the source and despite consumers and small businesses increasingly choosing to make and accept payments via card or with their mobile phone, there remain many customers who choose not to use online or mobile banking or to use smartphones. https://www.ofcom.org.uk/__data/assets/pdf_file/0022/117256/CMR-2018-narrative-report.pdf
    http://www.deloitte.co.uk/mobileuk/assets/img/download/Global-Mobile-Consumer-Survey-2018-UK-Cut-State-of-the-smartphone.pdf+
  3. The estimated size of the e-commerce sector in selected EU countries (based on turnover):
  1. Card payments are the most established form of retail payment in the UK. 78% of all spend in the UK retail sector was made by cards in 2017. https://www.ukfinance.org.uk/system/files/Summary-UK-Payment-Markets-2018.pdf
  2. Overall card fraud losses as a proportion of the amount that is spent on cards was 8.4p per £100 in 2018. https://www.ukfinance.org.uk/system/files/Fraud%20The%20Facts%202019%20-%20FINAL%20ONLINE.pdf

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