New EU regulation will require a two-factor payment authentication to tackle online fraud, forcing an increased in the use of biometric technology, says Mastercard.
The ’Strong Customer Authentication’ (SCA), which will come into force in September 2019, is based on the use of two or more criteria of authentication by the payer. These factors include "something you know such as password," "something you have such as phone, or car" as well as "something you are such as a fingerprint."
Some 1-2% of online transactions now require a cardholder authentication to complete a transaction. This figure is expected to rise to 25%, which is equivalent to one in four sales, reports Mastercard.
The new rules will mostly impact online card payments conducted on a smartphone or desktop, mimicking an in-store procedure. It will also apply to some contactless transactions, as a periodic check to ensure its rightful owner is using the card.
“The use of passwords to authenticate someone is woefully outdated, with consumers forgetting them and retailers facing abandoned shopping baskets," Ajay Bhalla, president global enterprise risk and security, Mastercard.
"In payments technology, this is something we’re closing in on as we move from cash to card, password to a thumbprint, and beyond to innovative technologies such as artificial intelligence. It’s far easier to authenticate with a thumbprint or a selfie, and it’s safer too.”
Mastercard says its currently working with banks and the rest of the industry to ensure they are implemented without ’disturbing’ the convenience of payments for consumers.
Mastercard has been leading the advancement of biometric technology in payments for years with a focus on improving both consumer experience and security online and offline.
One example is ’Identity Check,’ which is an authentication solution that enables individuals to use biometric identifiers, such as fingerprint, iris and facial recognition to verify their identity using a mobile device during online shopping and banking activities. This solution dramatically speeds up the digital checkout time, improves security and reduces cart abandonment rates.
The company is also testing a biometric payment card, with an inbuilt fingerprint sensor. The card is being piloted in South Africa and can be used to verify in-store purchases without the need to upgrade existing payment terminals.
With this approach, Mastercard will help banks not only to comply with requirements set out in the new PSD2 legislation but also to go further in optimising the checkout experience of their customers.
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