With PSD2 implementing new rules on strong customer authentication, Mastercard is predicting a big future for biometric technology.
Stricter requirements for authenticating online payments are being introduced in Europe. Known as Strong Customer Authentication, these requirements are part of the second Payment Services Directive (PSD2).
Strong Customer Authentication is running on a different timeline to other parts of PSD2, many of which went into effect in January, and will be required from September next year.
The European rules aim to tackle online fraud, by increasing the number of transactions subject to two factors of authentication by the payer.
Authentication for online payments and account access will be based on the use of two or more different factors in the future. The factors are something you know (such as a password), something you have (a card or a phone), or something you are (a fingerprint).
With regards to card payments, currently just 1-2% per cent of online transactions require cardholder authentication to complete a transaction (mostly likely using a password). However, Mastercard said this is going to rise to up to 25% or 1 in 4 payments from next autumn.
Mastercard said it is working with banks and the rest of the industry to ensure they are implemented without ‘disrupting’ the convenience of payments for consumers.
Ajay Bhalla, president global enterprise risk and security, Mastercard said: “The use of passwords to authenticate someone is woefully outdated, with consumers forgetting them and retailers facing abandoned shopping baskets.
“In payments technology this is something we’re closing in on as we move from cash to card, password to 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’s previous foray into biometric technology solutions, focusing on improving both consumer experience and security online and offline. One example is Identity Check, 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. It claims to dramatically speeds up the digital checkout time, improves security and reduces cart abandonment rates.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
