Rethink CommerceBlog

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Optimize Onboarding with the “Bowling Alley Framework” to Boost Recurring Revenue 20%+

Many online businesses think that the sales process ends when the customer signs on the dotted line, but it’s increasingly clear that strategic onboarding of those new users is just as vital when it comes to turning them into loyal customers.


I had the pleasure to recently host a webinar with Wes Bush, founder of the Product-Led Institute, who shared with the audience how to create a powerful onboarding experience for clients and thus turn them into happy, long-term paying customers.


Wes introduced us to what he calls the “Bowling Alley Framework”, a very easy-to-follow approach that will change the way you think about onboarding. In essence, this framework sets guidelines for three areas that you need to take into consideration when optimizing the onboarding experience: process flow, product guidelines, and conversational touchpoints.  Wes peppered his theory with specific examples of how this framework can be carried out:


  • Aim for Straight-line Onboarding (picture the bowling ball making an unimpeded beeline for the pins for a strike). Make the visitor journey to their goal and outcome as quick and easy as possible, not just signing up for your product, but getting the results they need.


Straight-line onboarding


Wes points out that 40 to 60% of customers never use the product after signing up and simply drop off. How to prevent this?

1) Map out the onboarding path,

2) Label every checkpoint as either absolutely necessary (“green light”), necessary but perhaps later in the process (“yellow light”), or not necessary (“red light”).

3) Use only the absolutely necessary checkpoints as your “straight line to the pins.”


Even removing one extra step from the initial onboarding (like letting them activate their email later, for instance) can lead to a 20% boost in monthly recurring revenue.


  • Supply a Product Bumper (picture one of the side gutters that you want to avoid with your bowling ball). Take the time to set up the processes that will gradually and naturally introduce your user to your product, in manageable and memorable small increments. Supply product tours or include visual tutorials in your app/platform; feature a progress bar that shows your customers how far they are in the onboarding process; include checklists of what the users need to do to reach their desired outcome; and onboarding tool-tips that map out the way. These touchpoints usually occur within your product (on site/ in-app), they are fully automated, and, if done right, they can give the user a first hands-on, positive experience with your product. Don’t be afraid to flatter and encourage the user with each new progress down the product bumper: “You’ve exported your first visual, kudos Mr. Designer!”, “Your first mass-mailing campaign has been sent out, High-five!”


Product Bumper


  • Make the most of a Conversational Bumper (the other side gutter), taking every opportunity to reach out to the user and engage her, in keeping your brand and product as salient as possible in her mind. These touchpoints are automated, manual or a mix of the two and can include: user onboarding emails, in-app messages, and sales outreach. Send a welcome email and follow up with a usage tip email that triggers users to maximize your product in unexpected ways. Sharing case studies of successful customers via another email can convince free users of the value of a subscription. Send an expiry warning email, while sharing the benefits of upgrading. Stick to those points that are of maximum importance to new clients in their first months of usage, finding the right balance between over-communicating and on-and-off sporadic messages, between being relevant and being too pushy/spammy.


Conversational Bumper


Want to learn more about Wes’ Bowling Alley Framework and get tips on how you can improve conversions and revenue? Watch the complete webinar on the 2Checkout website.



Customer Training: Why You Should Create an Academy for Your Customers

Grab your favorite pasta sauce and look on its back label—there’s always a recipe for an awesome dish. They don’t just sell you a product, they teach you how to use it.

This is the purpose of a dedicated training portal for your online customers. Teaching new users how to make the most out of your product should be part of your customer onboarding and lead generation processes because it adds significant value and helps to advance leads further down the sales funnel.


Bring the value of your product to the surface by training your customers to become expert users. An expert user is more likely to become hooked on your product and remain a loyal customer for years to come, as well as a valuable advocate of your brand.


The importance of a customer training portal

So, what does a customer training portal actually mean for your business?

An academy can reduce costs by:

  • Lowering the number of incoming tickets
  • Providing personalized and automated onboarding
  • Automating customer training and support
  • Helping to automate user activation
  • Acting as a point of reference for support staff to minimize blunders




It can also increase revenue by:

  • Providing a better customer experience
  • Increasing customer satisfaction
  • Reducing churn
  • Increasing possibility for an upsell
  • Providing the ability to sell premium courses or certifications
  • Increasing customer retention and lifetime value
  • Adding to brand equity, a company’s intangible real estate


An expert user will see the value earlier in the sales cycle. They will get value, are more likely to upgrade to your higher-end services, and will stick with you for longer.

Offering high-quality industry-related education can establish your company as a leader in the field and improve your standing as a strong brand, attracting more leads and making it easier to convert leads into customers.


How to use education to onboard customers

You most likely already have some sort of customer onboarding in place. Whether you have a blog, an auto-responder sequence, a webinar, or a live demo of your product, you are essentially providing training. All these are slow, time-consuming mechanisms to get to the end result.


A dedicated training portal can improve the process by adding self-paced education to the mix. The purpose of onboarding is to teach the use of your product until your customers reach the “Aha!” moment where they see the real value of your product.

A user can join a course teaching them the basics of your product. This is exactly what Hubspot does with their academy. They have courses on how to use every facet of their product.


Hubspot knowledge base


An example of a successful customer academy

How do you build a customer academy similar to Hubspot if you don’t have the resources of a giant? Here’s an example of a dedicated training portal: Softomotive Academy.


sofromotive academy


This portal was built using LearnWorlds, a top-rated online course platform and learning management system. LearnWorlds is a fully customizable, white-label solution to train employees and associates, educate customers, or sell online courses to a wide audience.


Tips for an effective training portal

There are other tools that an organization can use to implement a training portal. For example, one can use knowledge software. These tools usually have an integrated ticketing system, which is an advantage, however, they lack content presentation capabilities. Such capabilities allow course providers to create a professional-looking academy and engaging classes.


Some examples of features that you would expect in a customer academy that is built with an e-learning solution is a course player with lesson-ordering capabilities, interactive video, interactive ebooks, learner management, course access restriction, etc.

With the easy addition of engaging media, like visuals, audio, exercises, quizzes, and text, your training will be a unique learning experience for your users and encourage them to have fun in the process!


An academy for lead generation

Knowledge is highly valuable. Everyone is looking to learn something. This is why “How-to” videos on YouTube and articles on your blog get the most traffic.

People are looking for information on how to get to their intended goal. Giving away one or more free courses on popular subjects within your industry can bring in a flood of new leads. Those fresh leads then enter your educational sales funnel, get to know about your product during the process, and eventually become paying customers.


When creating a free course to collect leads, you should choose a subject closely relevant and valuable to your audience. Be sure to give a lot of value and prepare some nicely spread-out CTAs throughout your product material.

For example, this free course on Video Based Learning teaches how to create professional educational videos, acting as a lead capture for LearnWorlds.


Get started with your own academy

Facing constant pressure from competition and rapid development of new features, businesses need to do a better job of educating their customers. If potential customers do not fully or accurately understand your business benefits, they will be unable to discern your potential value.


Education-based customer onboarding is a huge opportunity for every organization that sells B2B digital products, especially if you are working towards increasing sales and reducing churn rates to maximize your profit.

Instead of having customers come back again and again with the same questions or directing them to a boring knowledge base, choose to educate them proactively, so they become power users of your product.




Industry Buzz – September 2019

Hi, sellers!

This month’s Industry Buzz comes to your aid with some optimization ideas.

Whether it’s customer onboarding, reducing customer churn, nurturing B2B leads, or selling internationally, we’ve got you covered. Ready to jumpstart your online business?


Making sure your SaaS business has enough recurring revenue to sustain itself and grow is vital. Because we understand this struggle, we came up with an eBook packed with actionable advice that will help you deal with the pains of growth as far as recurring revenue is concerned. Are you ready to reduce churn and cash in?


How do you reduce your customer churn rate? There are plenty of tactics and strategies you can use to win that battle. Check out this post where seven experts share their top tips!


If you sell online in the EU, you must have already heard about PSD2 and its requirements, SCA being one of them. The new European directive was necessary to encourage innovation and improve the electronic payments ecosystem. More specifically, digital payment transactions are meant to become safer, and more convenient. Read on to understand the impact of the directives on you, as a merchant.


How does your business welcome new customers? Do you make it easy for them to start using your product? Wes Bush, founder of the Product-Led Institute will show you how to create a powerful onboarding experience for your clients. Watch this webinar to transform your onboarding program, avoid user drop-off and maximize adoption.


If your business is among the 66% of online merchants who want to tap into those expanding online commerce markets and sell abroad, your success will depend on your ability to act locally. Keep reading to find out the most important elements you need to consider when planning to sell cross-border, and how an international commerce partner can help with each.


Did you know that software leads the pack in digital eCommerce sales, purchased by 53% of surveyed shoppers, and it’s followed by mobile apps at 33% and eBooks at 20%? Get more statistics around the online buyer behavior, by checking out the full infographic.

Social selling is about using your social networks to find, engage, and nurture the right prospects, build trusted relationships, close more deals and make a profit. If you already know who your ideal buyer personas are, here are some tips on how to make the most out of your social selling journey.


Most B2B leads don’t become customers. But email automation could help you address that issue. It lets you nurture leads at scale, so you can compensate for lower conversion rates with volume at virtually no cost. If you want to plan and write an email nurture sequence, read on.


If you have struggled with finding relevant content ideas for your eCommerce business, or with creating impactful content for your marketing, you need to watch this online workshop! Digital marketing expert Irina Ianculescu, founder of, will share her KICK framework for content marketing and help you address your most pressing content challenges.


Do you know how to create personalized mobile ads that resonate with your audience without spamming people? As a general rule of thumb, the more care and attention you pay to the kind of content you create and how you distribute it the less spammy your marketing behavior will be and the more effective your mobile marketing will become as a result. Check out more tips on how to avoid mobile spam.


Do you know other growth-related articles worth sharing?

Get a Glimpse at Global Online Shopper Behavior

From how often shoppers make online purchases to how they prefer to get information and what they pay most attention to, there’s a whole lot that businesses need to know about online shoppers in order to sell effectively.

Fortunately, 2Checkout has done the hard work and surveyed buyers, then sifted through the data to come up with some key insights that could transform how you conduct your eCommerce business.

Read on for a quick peek at the when, what, why and how of our latest infographic on online buyer behavior, then check out the full infographic for details on preferred payment and support methods and more.



How often do people buy online?

Shopping habits vary widely, with 17% making an online purchase once a week or more often, 26% buying online a few times monthly, 30% a few times a year and 27% buying only once a year.

Depending on the type of products or services you are selling, your focus is probably best spent on the 43% of shoppers making an online purchase a few times a month or more often, but keep in mind that less frequent buyers could eventually become part of your customer base as well.

Clearly, you need to go deeper and analyze your client base, understand average order value (AOV) and client lifetime value (CLV) by cohorts, and not just make decisions based on purchase frequency.



What are the most popular digital purchases?

Software leads the pack in digital eCommerce sales, purchased by 53% of surveyed shoppers, and it’s followed by mobile apps at 33% and eBooks at 20%.

Rounding out the top 5 categories are films or music and tickets at 18% each, showing the growing importance of eCommerce to the entertainment industry.


What about physical goods?

eCommerce is obviously not just for digital goods. People buy plenty of physical items online as well, and the types are fairly evenly split. Computers and electronics are the most popular category at 36%, followed closely by clothing and accessories at 33%. Mobile phones and tablets (30%), films/music on disc (29%) and books (27%) are also (still) popular physical items that get purchased online.


And how about subscriptions?

Entertainment continues to dominate subscription sales, representing 36% of online subscriptions, while 33% of people buy subscription-based downloadable software and 18% Software-as-a-Service.

Online education services at 17% and online media (magazine, newspaper or blog) subscriptions at 16% are other popular categories.



Okay, so you know what sells well—software, entertainment, and computers—but do you know why people buy or don’t buy? Check out some of the most influential reasons for making or abandoning online purchases so you can optimize and expand your business.

Data privacy and security are paramount to shoppers, cited as “very important” by 76% of them. People buying online also seek a good reputation (75%) and clear delivery, warranty and refund policies (73%). Payment method, flexibility, price, and local language are important to more than 60% of online shoppers, too.

When it comes to abandoned shopping carts, reasons vary.

About 39% of shoppers simply decide they don’t need the product, a reality that’s hard to combat. However, 37% abandon carts because of unexpected fees and 31% jump ship due to insufficient product details. These are areas you can clearly address as an eCommerce merchant.

You can also do something about the 27% of shoppers citing preferred payment method not being accepted and 24% noting a lengthy delivery time as reasons for abandoning their online shopping carts.



The preferred subscription renewal method is in flux, with 61% of shoppers opting for manual renewals and 39% going for auto-renew. This represents some growth in popularity of automatic subscription renewals, which were preferred by just 21% of shoppers in 2018. An explanation would be the proliferation of subscriptions in general and the convenience of auto-renewal.

When it comes to getting help related to online purchases, 62% of shoppers still prefer email. Online chat is preferred by 39% of shoppers, while 35% want to call by phone, toll-free. Only 19% of shoppers want a local number and 15% are interested in text messages.

Was this information helpful to you? For more information about online shopper preferences in 2019, check out the full infographic.

The B2B eCommerce Opportunity and Growth Beyond Agile – CommerceNow ’19 Part 3

If you’ve heard it once, you’ve heard it a million times: marketing is all about the customer. Unfortunately, that maxim can be easy to forget when you’re bogged down in the day-to-day of implementing eCommerce systems or managing agile sprints. But for all your hard work to pay off, you really need to stay focused on the customer. These recent CommerceNOW sessions covering eCommerce and growth may help you develop new strategies for making customer needs your top priority.


Maximizing the B2B eCommerce Opportunity: Don’t Be Afraid to Get Messy


In this session, Anna Talerico, Chief Operating Officer at Linux Academy, covers everything from measurement to compensation to goal setting. She started out by pointing out a reality that’s too often ignored: the buyer journey is messy! In contrast to often-shared images of a perfect funnel progressing from awareness to consideration to purchase, buyers make many detours along the way and don’t have a perfect path to becoming customers.


Different types of businesses may have different business models and complicated sales environments, but they all they need to focus on one thing: sell the way your buyers want to buy. Here are three easy steps to help you start selling for buyer needs, not internal processes:


  1. Define your lanes: Who works what deals? What deals can be sold which ways? Even in a complicated sales environment that involves selling online up to a certain number of seats, sending POs through Zendesk, fielding inbound and outbound calls and more, you can control and define how you sell your product for each kind of deal. Make sure to answer questions like who gets paid on a deal, who gets credit for expansions and renewals or how to transition deals to customer success.


  1. Document the ground rules. Once you’ve defined your selling lanes, write down the details—now! Too many companies operate on institutional knowledge about how deals work, leading to confusion and people working at cross-purposes to chase a commission. The more clearly you define and document lanes, the more likely you are to succeed—and the better prepared you will be to scale.


  1. Look for loopholes. What deals don’t fit in the system? In one company, salespeople were sending deals over to the eCommerce system to close and then grabbing credit for them, because deals were easier to fulfill that way. They weren’t following the process, but still got commissions! Find and close loopholes like this.


  1. Evolve as needed. No matter how good your initial “lanes” are and how well you document them, they won’t be perfect! Make sure they change as your business does. Evolve the processes in line with your team to ensure continued success.


  1. Sell the way your buyers want to buy. Don’t force them into anything—make it easy for them every step of the way.


Once you start recognizing the messy reality of the buyer’s journey and prepare to handle it, you may be ready to improve your product or service offerings to drive additional growth. Here’s how to do that—by going beyond agile.



Growth Beyond Agile: Focus on the Customer


Andre Morys, cofounder of konversionsKRAFT, discussed the recent hype around A/B testing, growth culture and experimentation—and where the hype falls flat. He shared the top 1% of growth principles that were consistent across 500 global experiments conducted by GO Group, a group of optimization consultants.


The Top Growth Principles You Can’t Ignore

  1. Give people a relevant reason to buy. Speak their language, not yours.
  2. Use herding and scarcity: funnel buyers to channels where scarcity exists.
  3. Make people feel good when the going gets tough—add a “you qualify for free shipping” message in checkout, for example.


Why are these are winning principles? Because they start with human behavior, not marketing departments. Too many marketers think about templates and tracking pixels rather than people and behavior. Leading with tactics will never win: lead with the customer instead.

While these principles are globally applicable, you’ll need to build out your own experimentation engine to find similar principles that work for your company. You can do that by getting started with an agile approach to growth.


What Does It Mean to Be Agile?


Agile has clearly taken off: the methodology has been widely adopted, with colorful sticky notes and cool illustrations available even on stock photo sites. But there’s way more to agile than feel-good sticky notes and cute drawings.

A lot of people are involved with agile processes, and agile means that product gets shipped more often, but it doesn’t always mean that the product gets better. Quality often rests with the product owner (PO). A good product owner will produce good product; a “bad” one will build a bad one. This means that agile alone is not enough—an agile team can build a product with a poor customer experience.


To ensure that agile works for your customers, not against them, have your company (including your PO!) adopt these three tasks to produce growth:

  • Analyze customer problems
  • Prioritize work (throw away irrelevant ideas!)
  • Validate learnings (with a quantitative framework)


The growth equation: analyze x prioritize x validate = growth


Start to move from thinking about features to thinking about customer needs. You’d be surprised to discover how many features are not designed with the customer in mind. In addition, when testing, don’t just test, test the right thing. Work on understanding customer needs through interviews, behavioral studies and more. Don’t stop your research after just a few interviews. Find out how customers really feel. And get angry about customer problems! When their problems drive you, you’ll succeed.


Ready to learn more about eCommerce success? Check out more presentations from CommerceNOW.



The Impact of PSD2 and SCA: Ordering Flows and Exemptions

We introduced readers to the Payment Services Directive 2 (PSD2) and Strong Customer Authentication (SCA), 3D Secure 1 (3DS1) and 3D Secure 2 (3DS2) in a previous blog post – What is PSD2 and What Does Strong Customer Authentication (SCA) Mean for You? My colleague Stefan covered what the revised directive means for business in Europe, how it will impact online shoppers and merchants at a high level, and how merchants should prepare for SCA compliance. In this article, I’m going to dive a bit deeper into the impact of the revised directive, specifically for 2Checkout merchants selling into Europe and their European clients.


Just to clarify at the outset: As a 2Checkout merchant selling into the EU, you are covered effectively for all PSD2 and SCA-related compliance issues, regardless of your location or the business model you are employing, whether it’s Merchant of Record (MOR) or Payment Service Provider (PSP). Still, you are surely interested to find out how the ordering flows are changing and how your shoppers will be impacted. Here are some points that might help. Remember also that if you are a merchant outside of the EU selling with a PSP model, SCA will not apply to your transactions.


What Was the Original 3D Secure Purchase Flow?


As a quick reminder, in 3DS1, once a customer enters the card details to make a payment, they are redirected to a 3D Secure page provided by their issuing bank (this is NOT controlled in any way by the merchant or 2Checkout). The authentication usually implies that the customer enters a static password or a code she receives via SMS on her mobile device.

The main problem with this process has been the redirect itself, and the fact that the page and the whole process were not optimized for today’s smartphones. According to previous tests we’ve run, 3D Secure 1 had a drop-off rate of 5 to 15% at the checkout, especially in countries where authentication wasn’t widely adopted by issuing banks.


PSD2 pic


Differences in User Experience between 3D Secure 1 and 3D Secure 2


As hinted above, 3DS1 has a clunky user interface and, on top of that, it looks suspicious and can make customers feel less secure, leading them to abandon the checkout. The good news is that 3DS1 will slowly become history and 3DS2 will be the new kid on the block in the EU.


3D Secure 2 – The Frictionless Flow


The additional good news is that 3DS2 comes along with frictionless authentication. What does that mean? Well, more data will be sent to the cardholder’s bank, who can then use this information to complete the authentication in a “frictionless” manner, without additional shopper input. This is probably the biggest difference between 3DS1 and 3DS2.

When we say “more data,” we mean 100+ data points sent to the cardholder’s bank to assess the transaction risk. If the customer’s bank believes it to be a safe transaction, the customer goes through the frictionless flow in which she has nothing left to do and the payment is sent for authorization and capture of funds. If you are using the 2Checkout hosted or inline ordering engines, we’ve got you covered and there’s nothing you need to do. If you are using our APIs, we recommend collecting more customer data to facilitate the frictionless flow.


3D Secure 2 – The Challenge Flow


If the frictionless flow is not possible because there is not enough information, or the information available triggers the need for authentication, the order goes through what is called the “challenge flow.” Another major improvement in user experience with 3SD2 is related to this flow. More precisely, 3DS2 is designed to embed the challenge flow directly within web and mobile checkout flows, without requiring full page redirects. If a customer authenticates on your site or webpage, the 3DS2 prompt appears by default in a modal on the checkout page (browser flow).


Strong Customer Authentication (SCA) requires banks and card issuers to authenticate their customers by using at least two independent elements between what a customer knows (such as a password or a pin), what she owns (a smartphone or token), or what she is (fingerprint, facial features). Any combination of the two will ensure the SCA requirements are met; failure to authenticate results in a declined transaction. The benefit is that 3DS2 offers more flexible ways to authenticate, in line with SCA requirements. Banks can now offer innovative authentication experiences through their mobile banking apps (sometimes referred to as “out-of-band authentication”). Instead of entering a password or just receiving a text message, the cardholder will now be able to authenticate a payment through their banking app by just using their fingerprint or even facial recognition. We expect many banks to support these smoother authentication experiences with 3DS2.


So, to conclude, the authentication process provides a better user experience, is mobile ready, embeddable, and more user-friendly, with static passwords replaced by tokens and biometrics. The improved user experience of 3DS2 is important, as this new regulation will most likely require authentication on European payments more often than before, which means the UX improvement can help reduce the negative impact on conversion. In order to prevent this, an integrated and up-to-date payments engine is key to maximize conversions. This is what 2Checkout also offers. Keep reading to see how.


3D Secure 2 – The Exemptions


SCA has some options to improve conversion by leveraging what are called “exemptions.”  The first one refers to low-value transactions, i.e. less than 30 euro for one-off transactions. Another exemption refers to low-risk transactions, which are determined by a real-time risk analysis performed by the 2Checkout system and transmitted to the issuing bank, which will allow the exemption.


Although in general an issuing bank will allow, for example, a low-value transaction to go through a frictionless flow, it can happen that based on the pre-shared risk parameters from the merchant, the bank’s transaction analysis system may decide SCA is still required. This cannot be controlled by the merchant or the payments provider. To prevent SCA in such cases, it’s important to share as much data around shopper account information, the customer herself, and the environment she is utilizing. There are approximately 145 possible parameters to share with the banks, out of which a handful are mandatory.


Another very important exemption refers to recurring transactions, as long as the charge is made for the same amount, for the same payee, and the same recurring cycle. In our subscription-based business, we see a lot of recurring transactions where the individual transactions share similar characteristics. However, they are related to a higher-level mandated Customer Initiated Transaction, called a CIT. By setting up a proper SCA-based mandate with the associated issuer, an issuer ID is supplied for the follow-up transactions. These transactions are considered Merchant initiated Transactions, or MIT.  The MIT transactions are out of scope for SCA.


Other more exotic exemptions are whitelisting and secure corporate payments. Whitelisting is where the customer grants the merchant/ payment provider access to her account to debit it. To our knowledge, a very limited set of issuing banks have made this capability available. Also out of scope of SCA are items like prepaid cards, mail/ telephone order (MOTO) transactions and one-leg out transactions (i.e. where one of the players – either of the payer or the payee – is based outside of the EU). To manage these, we are utilizing an up-to-date Bank Identification Number (BIN) database to identify issuers based outside of the European Economic Area (EEA) or transactions that use anonymous cards.


Exemptions are key for better conversions but are challenging to manage. It is our task as a payment provider to build an ordering engine that adapts and optimizes the use of these exemptions.


Transition Period – 3D Secure 1 Fallback


Until all issuing banks are up to speed with 3SD2 (and no, not all will be ready by the September 14 deadline), for each European online transaction, behind-the-scenes payment providers like 2Checkout will have an automated check in place to see if the issuing bank supports 3DS2 or not. If they do, we’ll go through the new 3DS2 process flow. If the issuing bank of the card holder is not yet ready with 3DS2, they will still be obliged to have 3DS1 in place in order to comply with SCA mandates. In such cases, your end-customer will be presented with the legacy 3DS1 experience through a redirect. This will actually be tough on payment providers that didn’t support 3DS1 flow before (since it wasn’t that widely adopted by the banks), as they will have to develop support for both models to avoid taking the hit from authorization declines from banks that won’t be ready with 3DS2. Luckily for 2Checkout, this is not an issue since we already had 3DS1 support in all our ordering engines and APIs.


3D Secure 2 Flow Examples


Now that the basics are covered, here’s how it will look when a customer decides to buy your products, services, or plans with 2Checkout’s support in place.

When a customer initiates an online transaction and submits her payment information (Step 1 of the purchase flow), 2Checkout will check with her issuing bank (Step 2, behind the scene), who will flag transactions that can proceed with the frictionless flow. As a result, in the next step (Step 3), the customer will see the Payment Confirmation or the Thank You page, once the payment is authorized.


PSD2 pic

Example of a «frictionless flow» when exemptions are applied.


If, however, the issuing bank decides that the information provided doesn’t qualify for an exemption, they will send 2Checkout the request to initiate the challenge flow and ensure that authentication takes place. From the end-customer’s perspective, this will mean that a modal window or pop-up will open with the message from her issuing bank, prompting her to authenticate through her mobile banking application (Step 2 in the image below).


PSD2 pic

When exemptions are NOT applied, the transaction goes through the «challenge flow». Steps 1 & 2.


The next steps of the purchase (Step 3 and 4) happen within the mobile banking application. The design and flow on the actual banking app is something that each bank designs and controls – what is being depicted below is a sample mockup from a bank that implemented a biometric authentication (through fingerprint). Once the authentication is completed, the transaction can be authorized, the “approve this payment through your banking app” pop-up disappears, and the customer is presented with the payment confirmation page (Step 5).


PSD2 pic

When exemptions are NOT applied, the transaction goes through the «challenge flow». Steps 3-5.


Now, authentication will not always go smoothly. The customer might not have her mobile device close by, or there might be an issue with the bank application or the mobile internet connection. In such situations, it’s best to have an alternative solution in place and offer your end-customers the chance to finalize the purchase by using either a different credit or debit card or by choosing an alternative payment method such as iDeal, SofortBanking, or SEPA direct debits. Within the EU, alternative payments will be an interesting alternative to card payments. Do not be mistaken, they already have strong customer authentication embedded in them, but the difference is that their users are well-accustomed to those flows, ensuring high conversion rates. Another payment method that can be used as an alternative is PayPal.

With 2Checkout, this process is handled through a retry page that allows the customer to choose from other available payment alternatives to complete the purchase.


PSD2 pic

When the transaction goes through the «challenge flow» and authentication fails. Good practice is to offer an alternative payment method and continue with the purchase.


As mentioned above—and it’s so important that it’s worth repeating—recurring transactions are treated as exemptions, as long as the charge is made for the same amount, for the same payee, and the same recurring cycle. Even though subscription renewals are exempted, and we ensure they are flagged as a Merchant Initiated Transaction (MIT), there is a chance that some issuing banks will still require SCA to complete the recurring payment. The end-customer, therefore, needs to be brought back in session to complete authentication.


In order to tackle these use cases, we help our merchants with dedicated email notifications sent out to inform and collect SCA from end-customers. If 3DS2 verification is needed and your customer isn’t prompt in authenticating a transaction, then the bank will decline the payment. In such cases, it’s essential we communicate this to your customers by sending them 3DS2 email reminders bringing them on-session to complete the verification needed.


PSD2 pic

When a recurring transaction does not go through as an exemption, the customer receives a message asking her to authenticate in order to continue the subscription.


PSD2 pic

Once «in session», the customer can proceed with the 3DS2 authentication and the recurring transaction can continue uninterrupted.


PSD2 and SCA Impact – Final Thoughts


As a wrap-up, it’s worth noting that we’ve upgraded our checkout pages (both hosted and inline) to support the new European directives. We’ve also included the new 3DS2 protocol into our APIs and payment pages in a way that is designed to keep changes for merchants at a minimum, and minimize the impact of SCA on checkout conversions.


The first issuing banks are already gradually supporting 3DS2, but the whole changeover process will still take some time. Therefore, 3DS1 and 3DS2 will exist side by side as standards until further notice, and we expect both will be accepted by banks and card issuers for a while longer. Our platform was designed to detect whether authentication is needed, and, depending on what the card issuer supports, either use 3DS2 to authenticate the customer or fall back on 3DS1 when the new version isn’t yet supported by the respective bank.


We believe successful handling of exemptions will become a key component for building a first-class payments experience that minimizes friction. We also expect there will be differences in how national regulators and even individual banks will support exemptions and we are building solutions to help manage this complexity for you.


PSD2 pic


In the meantime, if you want to learn more about this and dive deeper into use cases for possible feature impacts, view our webinar on “All you need to know about PSD2 and Strong Customer Authentication if you sell online” and read more resources and our FAQs on the 2Checkout dedicated PSD2 landing page.

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