Payment authentication is an essential part of the payment process just like other authentication types like biometric identity verification, etc. The merchant verifies the cardholder’s identity by using PIN codes, chip readers, or driver’s licenses. The card issuer will then authenticate the transaction. In both card-present and online payment scenarios, the consumer must follow security protocols and follow fraud prevention and awareness guidelines to ensure that their payments are secure. A multi-factor authentication solution will help improve security and prevent fraudulent transactions.
Mandatory SCA is an important milestone for the payments industry, marking the most significant change since the introduction of chip and pin payment systems. Payment authentication measures are critical for consumer security, as studies show that if a payment transaction takes longer than required, a customer will abandon it. Therefore, sophisticated fraud checks are essential to ensure the safety of online customers. However, it is still unclear how the new regulations will affect payment systems in the United States.
Authenticating buyers is critical for businesses, as fraudsters are increasingly sophisticated at stealing cardholder data and shopping for goods and services at merchants’ expense. Authenticating buyers before allowing them to make payments is crucial to avoiding losses and protecting your profitability, cash flow, and chargebacks. In addition, it ensures that legitimate buyers are being processed. By identifying and verifying buyers, payment authentication is a powerful fraud prevention tool and can help merchants focus on other aspects of their business.
One type of authentication is PDS2, which involves checking the cardholder’s information against the card issuer’s database. In order to avoid fraud, PDS2 requires the merchant and payment processor to complete critical fields that are crucial to secure the transaction. The issuer can grant exemptions to this rule for a secure checkout experience. As the world continues to become increasingly connected, payment authentication and other security systems such as mobile identity verificationare becoming a must-have for online businesses.
If you want to learn more about how delegated authentication and payment authentication work with PSD2, you can read this infographic fromLoginID.