The new rules for card payments make it necessary for businesses to implement strong customer authentication (SCA) for secure transactions. SCA can be implemented to secure low-risk transactions and is usually performed by issuers. Issuers also perform delegated authentication to help protect sensitive payment information. These standards are designed to ensure the security of card payments and are in line with PSD2 requirements.
The latest security regulations require all online merchants to encrypt payments in response to the growing fraud risk. This means implementing an SSL certificate or TLS-based encryption technology. To be compliant with PSD2, online merchants must implement this technology. It must be implemented securely by a payment provider, which is required by law. Once implemented, delegated authentication should be seamless for consumers and a painless process for merchants.
With 2FA, a merchant can leverage their existing knowledge of customers to verify their identity. The issuing bank must give the merchant buy-in to implement delegated authentication, and it is possible to suspend it if fraud is too high. Ultimately, the merchant must ensure that their delegated authentication program keeps fraud under control, or they will be handing over authentication control to issuers and losing customers.
While PSD2 SCA introduced several additional steps for merchants and consumers, delegated authentication alleviates the friction and complexity. Merchants no longer have to manage the authentication piece and can focus on delivering the customer experience. The FIDO standards can be used with EMVco 3-D Secure and PSD2 and are expected to make it easier for companies to share authentication and risk data.
Merchants can use an SCA solution to implement this new payment security measure. This solution enables merchants to integrate strong customer authentication into their payment flow and delegated authentication. Further, merchants can integrate SCA solutions with 3DS2 and delegate the authentication task to the SCA provider. This ensures the security and integrity of the payment process. It also provides merchants with increased control of their customer journey.
If you want to learn more about how delegated authentication and payment authentication work with PSD2, you can read this infographic from LoginID. You can also visit their website for more information and professional help in terms of the latest security systems.