Visa Inc (NYSE:V) has refuted claims by the European Union that enforcing the use of passwords or codes to authenticate online transactions will help curb cybercrime and online fraud. The payment giant whose business model could be significantly affected by the new proposal insists that such a move will only disrupt online shopping.
Visa’s Concern
The company has warned that increased checkout steps will only cause shoppers to abandon purchases, significantly disrupting one of its key revenue sources in the region. Research carried out in the UK, considered as one of the biggest markets for e-commerce, has shown that up to 52% of customers could be tempted to pursue other avenues of shopping if forced to follow a string of checkout steps.
A major cause of outrage among a good number of affected parties is the fact that the proposed technical standards will apply to transactions worth as little as 10 Euros. The same would especially affect the likes of Uber among other websites where people have registered payment cards for easy payments.
“These new proposals threaten to seriously disrupt the way we all shop online. All of this inconvenience comes with no evidence that it will actually reduce fraud,” said Visa’s chief risk officer for Europe, Peter Bayley.
E-Commerce at Risk
The fact that most websites based outside the EU may not implement the new authentication requirements also means that 6 billion euros worth of transactions stands to be turned down. Visa says adoption of the proposed legislation will only lead to the demise of e-commerce, which has been thriving thanks to the ease of making payments.
The European Banking Authority is yet to make a final declaration on the proposed legislation with the final proposal set for adoption early next year. Visa can heave a sigh of relief given that The European Commission will also have to go through any proposed legislation before passing them to EU states and European lawmakers to ratify them.
Given that the legislation is meant to help companies like Visa by reducing fraud, one would think that the payment companies involved would have a say in what is implemented.
Visa Inc (NYSE:V) stock was up by $0.87 in Monday trading session closing the day at a high of $81.69 a share.