By Evi Triantafyllides
Remember when payment authentication was as simple as signing a check, the validity of which was then confirmed by comparing it against … yet another signed document? The quest for a less error-prone procedure has led to dramatic leaps in precision, and the days of a single, simple authentication method are long gone.
With payment software development reaching unprecedented levels in the past years and a general evolution in the fintech space, authentication is shifting to entail accurate, sophisticated and multilayered procedures delivered by diverse players within the payments chain .
Passwords, phone numbers, fingerprints, the name of your father's great, great grandfather ‒ your entire DNA string please. In an effort to categorize the various authentication techniques that have come about, the generally accepted, three-tiered classification system has emerged. It includes knowledge-based, ownership-based and inherence-based authentication, described as follows:
Multilayered authentication, which involves using more than one type of authentication, is expected to play a part in bringing today's proliferating data hacks to a standstill. Pairing different authentication types is becoming standard procedure, and two-factor authentication an industry buzzword.
What does authentication mean in the grand scale of the payments arena? With MarketsandMarkets reporting a 19.7 percent annual increase in biometric authentication techniques, and with those expected to be valued at $10.8 billion by 2020, authentication is a space to pay attention to, and one that will shape the future of how payments are done.
Moving away from the archaic, straightforward signature model has proven to be multifaceted and clunky, with different authentication methods competing for legitimacy. While there is no way to predict which authentication methods will become the norm, the path toward sophisticated, manifold authentication is uncontestable.
Eventually, rising costs of technology investments and escalating fraud levels will reach their peaks. Monetary investments will start to scale, and return on investment will kick in, turning a double whammy of deficits into a double win of declining infrastructure costs and decreased fraud. Additionally, fraud liability will shift away from customers and merchants (who will now be doing their share by participating in authentication programs), and accountability will increasingly fall upon card brands, banks and the devisors of authentication programs.
Indeed, what now seems to be a messy mix of varied authentication tools should be appreciated as efforts towards securing a more profitable, protected payments future.
Evi Triantafyllides is the Marketing Director at PAAY, a software solution that qualifies e-commerce transactions at lower interchange rates and shifts liability for e-commerce fraud away from merchants, to the card issuers. Evi was the first full-time employee at PAAY. She is responsible for the company's marketing, and at the same time focuses on ISO relations and partnerships. Find out about PAAY at www.paay.co or reach out to her directly at firstname.lastname@example.org.
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