Why it’s important for travel to be SCA-ready

4 November 2020

By Jean-Christophe Lacour, head of merchant services, payments, Amadeus

It’s an unprecedented period in the history of the global travel industry, with the pandemic continuing to suppress the intrinsic demand for air travel that has helped the industry grow in the mid-to-high single digits, for each of the last ten years.  Clearly the coronavirus has caused a significant demand shock in 2020 as governments have taken the decision to introduce travel restrictions. 

In the midst of efforts to adapt to the current environment, the industry must also prepare for the Strong Customer Authentication (SCA) requirements of the Payments Services Directive II, which come into force on December 31 across Europe.

According to our recent research with respondents from airlines, hotels and travel agencies, only one third of firms expect to be ready to apply SCA checks across all sales channels in time for the December 31 deadline. The pandemic has been a major cause of delays, with respondents confirming the pandemic has set SCA programs back by six months on average across the industry.

Even if travel merchants won’t manage to hit the deadline, many are working hard to ensure they don’t overshoot by too long, with the aim of being ready to handle SCA to make the most of the expected recovery in bookings next year. Many companies in the industry are aware that an inability to perform SCA when requested by a card issuer could result in a failed transaction and ultimately a lost sale. But delivering SCA won’t be straightforward for travel.

Four reasons why SCA is challenging for travel

Making SCA happen in travel is more challenging than most industries. Here are just a few of the reasons and steps the industry can take to address them.
  1. Merchant Initiated Transactions (MIT) are common, meaning the traveler’s card is charged without them being present. Such MIT’s occur in scenarios like a hotel ‘no-show’, an airline cancellation or even if someone returns a rental car without having filled the petrol tank. For such payments, where the card holder is not present, the industry will need to present clear terms and conditions to travelers when they originally book in order to gain permission to charge the card at a later stage. 
  1. A large percentage of travel is sold by travel agents, whether online, or through bricks and mortar or business travel agencies. This means there are often multiple technical intermediaries in the distribution chain that all need to be able to convey SCA data between travel suppliers and their agents.
  1. If they haven’t already done so, we recommend industry players map out their payment flows in detail to understand dependencies and better collaborate with partners. From our side, the Amadeus Travel Platform, the world’s largest travel distribution platform, is now SCA ready and officially handled the world’s first SCA-compliant indirect travel payments earlier this month.
  1. Finally, travel involves ‘multi-merchant’ bookings where a travel agent sells a package of products from multiple merchants such as airlines, hotels and car rental firms. In such scenarios, SCA needs to be performed at the time of booking but also by all the merchants involved in the transaction.

Moving to the latest version of the 3D Secure standard can help travel companies tackle multi-merchant complexity using ‘dynamic linking’. Amongst other benefits, this new technology removes the need for each merchant involved in a booking to contact the traveler individually in order to ask them to perform separate SCA checks, which would negatively impact the customer experience.

Despite the pandemic delaying SCA programs by six months on average across the travel industry, 85 percent of firms do at least expect their direct channels to be ready within the first half of 2021. Those firms that have managed to tackle SCA more completely will be in a stronger position to capture a greater share of bookings when the industry’s recovery gathers greater momentum.

If you’re considering how to deliver SCA in travel, why not download our SCA Action Plan report

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development