Advanced customer verification – are you ready for that?
Fraud is on the rise and attacks made by cybercriminals are becoming more sophisticated. Basic identity proofing is no longer effective, so it’s time for turning the clunky process into a smart, multilayered approach to fraud prevention.
Well-protected payments and online activities are what attract the attention of both consumers and online businesses. Consumer awareness has increased, so users now expect transactions to be not only convenient and friction-free, but also highly secure. Especially since for a vast majority of consumers, the security of their personal data is paramount, when it comes to payments and banking.
Strong Customer Authentication
The new regulation, known as Strong Customer Authentication (SCA) will be introduced in Europe on September 14th, 2019. The SCA is required by the second Payment Services Directive (PSD2), so, based on the requirement, payments need to be authenticated using at least two of three independent elements of payment authentication, and these are:
- Something the customer knows, such as a password or PIN ,
- Something the customer has or possesses, like a mobile phone ,
- Something the customer is, for instance, face ID or fingerprint.
So, before payment is accepted, a customer’s identity is verified with a single-factor (for instance, a password), two-factor (a one-time code), or multi-factor.
Cybercriminals constantly try to find ways for overcoming traditional authentication methods, so it’s a growing need for using more advanced solutions to locate legitimate customers. With a number of new technologies booming, users are ready for biometric authentication and other ways of identification through their smartphones.
3D Secure without friction
2019 is also a year for rolling out the new version of 3D Secure authentication, known as 3D Secure 2.0, which meets SCA requirements for card payments. The opportunity for 3DS 2.0 comes with a promise for stronger verification, ease of use and minimal friction.
There’s no question that customer experience is paramount, so an upgraded 3DS will make the purchasing process way easier thanks to the elimination of enrolment pop-ups and by speeding up the authentication. The annoyance factor will disappear which, in turn, should lead to improving the number of successfully completed transactions.
For more information about 3D Secure 2.0, check out one of our previous blog posts.
Greater convenience for customers
Many companies that place convenience on top, forget about high standards when it comes to security. However, according to The 2018 Global Fraud and Identity Report, 75% of businesses are interested in advanced authentication that won’t impact the digital customer experience. Moreover, Ideology Sixth Annual Fraud Report states that reducing customer friction is the number one fraud prevention challenge for online businesses.
Nowadays, risk management is more flexible than before, which makes it more efficient to spot fraudulent behaviors and patterns. The question is: How to verify customers without interrupting their buying experience?
It’s natural that merchants are concerned about the SCA impact on the conversion and overall payment experience. And, the goal is advanced verification that doesn’t compromise user experience.
Using relevant analytic tools to monitor metrics that increase both speed and efficiency of the verification process, as well as working with a reliable payment partner will keep businesses away from generating negative customer experiences. Keep in mind that authentication methods need to be suited for a certain use case, so the payment process will end up with nothing but customer satisfaction.
Just for the record, the SecurionPay platform meets both market and regulatory requirements, so you can rest assured that your transactions are well-protected. Also, we are working on a solution for stronger customer verification based on AI and advanced technology, that won’t affect the user experience and your bottom line. Stay tuned, we’ll keep you posted!
React when red flags go up
AI solutions are extremely helpful to evaluate the risk of a certain use cases during purchase. The key is to provide tools that will meet both market and regulatory requirements, while requiring a mindset shift.
Overall, advanced customer verification should be a combination of both security and convenience. And, merchants need to implement technology that won’t disrupt the overall experience and help companies build trust among their customers. The market needs highly-effective, multi-layered solutions tailored to the customer experience.
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