Jean Fang, Product Manager, FIME
The growth of e-commerce, m-commerce and remote commerce transactions is showing no signs of slowing down. In 2021, over 2.14 billion people worldwide are expected to buy goods and services online, up from 1.32 billion in 2014. The growth of card-not-present (CNP) transactions has driven a new age of consumer convenience but in parallel, a new age of fraud.
As EMV®* chip card adoption gathers momentum, with 76.7% of card-present transactions being EMV, fraudsters are looking for an easier way in. And the stats speak for themselves – digital fraud rates now account for 60-70% of all card fraud in many developed countries. In fact, it was even estimated that the gains made from savings in card-present fraud were eclipsed in 2018 by the losses from CNP fraud. This is not only affecting approval rates but also all-important consumer trust. So, what can be done? EMV 3-D Secure – EMV 3DS for short – is one solution that’s leading the way in the CNP ‘catch up’.
What is EMV 3-D Secure?
EMV 3DS is a messaging protocol used to identify and verify cardholders for CNP transactions. The specification improves communication between the issuing bank, the acquirer and the merchant. By doing more work ‘in the background’, it’s able to streamline the user experience, improve approval rates and reduce fraud. These features allow it to offer a frictionless online authentication solution.
The first version of the messaging protocol was initiated by Visa and was quickly followed by other international payment schemes. This was a fragmented and complex solution for the industry, however. Now, industry body EMVCo has taken ownership and is managing the evolution of the specifications.
The latest version of the EMV 3DS specifications includes new features to address the pain points of the old protocol. These improvements aim to deliver consumers a much smoother experience and keep transactions safe from new techniques employed by fraudsters. Let’s take a look at the new features and how they can improve the digital retail experience.
More authentication options
One of the new features set to enhance the consumer experience is the support for biometric technology that consumers have gained access to recently. Many shoppers are now familiar with a variety of biometric authentication methods, such as facial and fingerprint recognition. For some it is still a novelty to pay using your face, but this doesn’t mean it’s not a priority; it’s predicted that we’ll see nearly 90% of businesses using it by 2020.
The act of replacing ineffective static passwords with more complex authenticators is much more secure and user-friendly. Implementing support for these methods of authentication can help merchants with their aims to reduce cart abandonment. 28% of U.S. online shoppers have previously admitted to quitting orders due to checkout processes being too long or complicated and 17% said that they have abandoned checkout because they didn’t trust the website with their credit card information. Therefore, striking the right balance between convenience and security is fundamental.
The increase of choice isn’t just limited to more authentication options than before. Another new feature of the latest version of EMV 3DS enables both customers and merchants to have greater input. Customers will be able to ‘whitelist’ merchants with their issuer when setting up, say, a recurring purchase. This lets banks know a full review is not required, reduces customer prompts and can help support banks in risk ‘scoring’ merchants.
By feeding more data elements collected from the shoppers to the issuers, merchants can further improve the frictionless transaction experience. This increase of choice for customers, merchants and issuers benefits all parties, as it gives customers an easier experience and provides valuable customer data that can be used to inform the development of new services.
Another feature that has been added to the latest version of EMV 3DS is the support for new use cases, including identification and verification applications, as well as payments. While these use cases are still being explored and defined, they could include features such as being able to add a new payment card to a mobile wallet and open a new account online. And it’s not just consumer use-cases that are being explored. In the future, EMV 3DS could even be used by governments to authenticate citizens.
Alignment with new regulation
Simplifying alignment with regulatory requirements is another major bonus of EMV 3DS, especially with an increasing number of countries mandating multifactor authentication in CNP environments. Take Europe’s PSD2 and the strong customer authentication (SCA) mandates, for example. Implementing EMV 3DS offers banks an opportunity to utilize the same infrastructure to process SCA as well as EMV 3DS transactions. With more data included in the message requests, indications such as whether Acquirer SCA or a transactional risk analysis (TRA) have already been performed, or if a customer utilized a FIDO authenticator, can simplify the authentication process.
Next steps to implementation
Wherever in the online payments chain you sit, EMV 3DS is a compelling authentication solution fit for the omnichannel age, especially now it includes these new elements. But, as with any major system upgrade, implementation does not come without its challenges and testing requirements.
Before embarking on an EMV 3DS project – whether an entirely new system or upgrading a legacy system – there are three key stages of testing to consider: functional, security and integration with payment schemes.
Understanding what scope of testing falls to each stakeholder and navigating the three stages quickly and cost-effectively can be a challenge. And it’s here where support from a reliable testing and consulting expert on EMV 3DS can be invaluable.
To learn more about the key considerations and challenges when migrating to EMV 3DS, read our eBook.
*EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.
HALO TRUST USES ADAPTIVE INSIGHTS FOR STRATEGIC BUSINESS PLANNING
Cloud-based financial planning helps HALO Trust deliver greater benefit to communities affected by war
Adaptive Insights, a Workday company, today announced The HALO Trust, the world’s largest humanitarian landmine clearance organisation, employing more than 8,700 employees across 25 countries, uses Adaptive Insights Business Planning Cloud to support the charity’s continued growth with a modern business planning process. The HALO Trust joins more than 750 non-profit customers that trust Adaptive Insights for business planning, benefiting a variety of communities and causes worldwide.
The organisation relied on the development of financial plans utilising complex spreadsheets, which were difficult to integrate into the global planning process and inefficient when producing multiple scenarios for effective option appraisal.
“Being able to holistically manage real-time changes is critical to our success. With a single, powerful system in the cloud, we’ve eliminated the headache of working with siloed spreadsheets and have significantly reduced the time taken to produce high-quality financial models,” says Mick Darby, finance director at The HALO Trust.
For more than 30 years, The HALO Trust has kept people safe and helped communities to rebuild by clearing landmines, destroying weapons, managing stockpiles, and educating communities how to stay safe until the dangerous debris of war can be removed for good. By moving HALO’s planning and analysis process entirely to the cloud, the finance team provides the guidance necessary to support the rapid growth of the organisation, which has doubled in just the last three years. Providing globally distributed team members with an easier, faster, and standardised approach ensures that the charity’s budgets and forecasts reflect current local conditions and currencies, all rolled up into a single platform.
“We’re proud to provide organisations like HALO with more time to focus on the important humanitarian work they do by simplifying and modernising their business planning process,” said Robert Douglas, Europe planning director at Adaptive Insights. “By streamlining budgeting and forecasting, we’re helping to make every pound and every volunteer hour count, which in turn helps HALO maximise the impact on its mission to save and protect lives.”
IS DATA PROTECTION AND PRIVACY RELEVANT ACROSS ALL STRATA IN INDIAN SOCIETY?
A Study by Pensaar Design With CGAP
Pensaar Design has been working on a research study with CGAP to better understand low-income customers and their behaviour towards data protection and privacy (DPP).
The objective being to understand whether customers were aware of what it meant and how it impacted them, it started out with exploratory research to gain this context.
What we found was that once you broke down the seemingly complex term and contextualised it for them, most customers quoted instances of data misuse in their own lives and those in their immediate network.
Examples from within their own circle had actually created some level of understanding about the issue, and made it relevant to this audience. There were instances of phishing emails, of calls, and so on, and not having the benefit of sufficient awareness or education, this audience seemed, particularly at threat.
We discovered that the concept of consumer consent is particularly broken in the low-income segment in India. This is because very often these customers are in dire need of a loan or other financial solution, and at that juncture, given their urgent need for funds, often end up signing over their privacy rights without even fully realising what they’re doing!
Despite how things have been thus far, however, what we learnt was that these customers do have some degree of awareness, and are in fact concerned about their privacy and personal information and are willing to do more to protect it.
We found that these customers are willing to pay for access to Data Protection and Privacy, or even open to investing time or effort if need be, to secure their data.
Basis these findings, we are now in the process of testing these out in the real world, to further validate these findings.
Deepa Bachu, CEO & Co-Founder of Pensaar Design, the firm carrying out the research said “We are delighted to have the opportunity to develop a really rigorous understanding of DPP among the lower-income group and the privilege of partnering with CGAP. Our behaviour based research gave us an opportunity to continuously learn and evolve our understanding. We look forward to the next phase to further carry out behaviour-based research experiments with financial service providers.”
Maria Fernandez Vidal and David Medine, CGAP Senior Financial Sector Specialists said, “We are excited about partnering with Pensaar Design to test the degree to which lower-income consumers are willing to act to protect their privacy in their financial transactions. Moving from simulations to marketplace financial products will further enhance our understanding of the importance of data protection and privacy to consumers. The findings could promote industry self-regulatory efforts by making the case that privacy is good business.”
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