Fear of fraud and the need for authentication has been slow and cumbersome for merchants and consumers in the past. While authentication has been greatly improved through SCA and 3DS 2.0, it still causes friction and unnecessary purchase abandonment. The payment ecosystem itself requires a holistic approach in transaction verification and approval from merchant through to payment provider and issuer.

Heading into 2023, taking a layered approach to authentication, that is, balancing friction, risk, and customer experience, will ultimately open up new channels for merchants and support them with growing their customer loyalty and therefore, revenue. Ultimately, what merchants are looking for is to maximise their revenue conversion, protection and cover from fraud and abuse, while also being free to provide a seamless customer experience.

As regulations, expectations, and innovations evolve within the payments ecosystem, PSPs (and other payment providers) will need to rely on strong partners to provide holistic solutions to their merchant bases, ultimately becoming a key ingredient to any tech stack and growing their own network.