How Biometrics Help Prevent Fraud While Streamlining Online Payments

Biometrics data improves the authentication process

In a recent webinar hosted alongside Stefan Cenusa, 2Checkout’s Product Manager in Payments, we addressed how the modern commerce ecosystem has begun to employ user biometrics data in faster and safer ways to clear payments.

Overview of PSD2, SCA, and 3D Secure 2

Before diving into biometrics, we started off with a “primer” on PSD2, SCA, and 3D Secure 2. We walked through the authorization process (whereby the issuing bank verifies the validity of a payment either by card or alternative payment method, so the transaction can go through) and then described the added step of authentication. In this step, the consumer must prove to the issuing bank that it is, indeed, him/her who is performing a transaction.

  • eCommerce fraud losses in Europe have recently been as high as 2.1 billion USD dollars/ 1.8 billion euros
  • CNP (Card Not Present) transactions are more likely to be declined (15–20% versus in person at only 2–3%)
  • Of all fraud, CNP is most common at 75% of cases
  • Password authentication is outdated and vulnerable, and leads to 20–25% of cart abandonment
  • After being falsely declined, 33% of consumers stop using the card or use it less
  • 58% of consumers, when questioned, are positive about new solution alternatives
  • Variations that determine whether SCA is required and who bears the liability (the issuing bank, the acquirer, the PSP/processor, or the merchant), depending on the location of both the merchant and shopper
  • Transaction exemptions and what payments are deemed out of SCA scope.
SCA exceptions
SCA exceptions

Biometrics make payment authentication more secure and successful

This session also offered the opportunity to present live demos of how biometrics verification works:

  1. The consumer clicks “Buy” on the product page
  2. The consumer is directed to a page where they fill out their payment info, including the card they are using
  3. Biometrics are used to confirm that the consumer is the card holder and the individual making the purchase. Two of the options we showed flow examples for in this session included:
  • How shoppers can use their fingerprint (which can be recorded with an optical or a capacitive scanner), or
  • How they can use a combination of facial recognition and QR codes, an approach which requires that the consumer has a modern smart phone, or a phone camera or infrared sensor. This latter method used to be unreliable but has become more and more safe and efficient.

Threats to biometrics and what to expect in the future

Unfortunately, even as these new measures are used to prevent fraud, the fraudsters continue to get better at outsmarting technology. Deepfake is an example of technology that can bypass face recognition software, for example, and fingerprint scans can also be fooled.

How Biometrics Are Shaping Payments and What This Means for Online Merchants webinar

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2Checkout (now Verifone)

2Checkout (now Verifone)

2Checkout (now Verifone) is the leading all-in-one monetization platform for global businesses built to help clients drive sales growth across channels.