Stripe Acquires Touchtech

Verified by Visa with an appropriate implementation is one way to fulfill the requirement for Strong Customer Authentication. All Visa cards in the EEA will have to either implement Verified by Visa in a compliant way, or use some other method such as a randomised CVC you can find out via a mobile app.

Because it would decimate checkout conversion to save a few basis points in fraud losses.

I built Quaderno to deal with the VATMOSS nightmare on Stripe. More information at https://quaderno.io/integrations/stripe/. Let me know if you have any questions. Glad to help.

You’d still have to handle the complete flow for the case where the exemption has been used multiple times since the last authentication though.

Every chargeback from a fraudulent transaction costs ~$25 to businesses.

In this case, government regulation makes SCA required; but in Europe most banks already practiced SCA. For free.

Here payment card fees are also far far lower because we don't have a credit card mentality of always seeking that tiny percent cashback, so these are much rarer in Europe. We also have banks themselves competing with Visa and MasterCard, for example in Belgium with bancontact. The banks offer merchants even lower fees for these.

So yes in some worlds the fees are passed down to the consumers. In other worlds, you have the United States.

The article mentions "“There was a 25 percent drop in sales overnight when the changes came into effect in India,” he said in an interview. “So we think SCA is a huge deal.".

I highly doubt that 25% is anywhere close to the long-term impact, but any fraud detection that increases friction decreases the number of impulse purchases. If it's not clear that reduced fraud creates a bigger benefit than lost purchases the industry won't implement it. Add the sometimes weird incentives (chargeback fees etc) and something that's beneficial to the consumer might never be implemented willingly by payment providers.

If the friction from better fraud detection reduces impulse purchases it might be detrimental

There's more to that. Anti-fraud mechanisms that require additional action on user's side, lower the conversion rate.

For example 3DSecure mechanism redirects customer to another site where user has to put a number received in a text message. My phone is in another room upstairs. I cancel the payment and tell myself I'll do it later. Of course I might do it, but I might forget about it or change my mind.

Another example: (in Europe) from time to time, when making a transfer/payment, I have to generate an OTP using a physical device that I received from my bank. I find it extremely irritating, and I don't take this device with me everywhere, so if I'm making a payment and I'm expected to use this device, I cancel the payment.

I've worked in a place where we introduced 3DSecure mechanism for our payments, and in certain countries it dropped conversion rate while in others (where people are used to such mechanisms) it remained the same

Those "rewards" aren't savings on fees, passed on to the customer, they are increased fees that are absorbed by merchants. Rewards cards carry higher fees the same way corporate cards have higher fees and the same way Amex in general has higher fees. Larger merchants can have a consistent effective rate on processing fees if their business has a good mix of non-rewards and debit cards (lower rates) in their transactions, but many smaller merchants take a bath on fees if too many of their customers use rewards cards. You'll also see many smaller merchants decline to take an Amex because it simply costs them too much. Your 2% on groceries or 3% cash back on gas doesn't materialize out of thin air and it sure as hell isn't coming out of the processor's or issuing bank's pockets, it is being paid for by the merchants you shop at.

> "Without profits, people would pay for things at cost which sounds great in the short term, but would result in no money left for further improvements much less incentivizing hard work..."

note that profit (without qualifiers) == net income (as opposed to gross profit or operating profit)

so it's not true that no money is available for further improvement. profit is what's left over after re-investment (and other costs).

it's also not strictly true that it doesn't inventivize hard work. if the owners take money out of the company as salary and benefits, or they derive satisfaction from the quality of their work and/or pride in building an organization, they may be very well incentivized.

to actually answer the original question, you'd need to understand how value gets distributed in a value chain (including customers). it depends on the relative power of the various actors in the chain. if customers have a lot of power, they'll extract most of the value of the value chain (likely in the form of lower prices). if suppliers have the most power, they'll retain most of the excess value in the value chain as profit. based on a quick read in this case, the supplier has lots of power, so stripe will likely retain most of the profits.