Financial institutions and online payment processors are caught between the competing priorities of customer safety and ease of use. The solution to this predicament is user-friendly authentication.

But it’s not simple, particularly because the majority of digital payments are made in e-Commerce, an industry that cares a great deal about customer service and is afflicted by high abandonment rates. The design of digital payment systems has been heavily influenced by commercial demand to minimise the likelihood of user abandonment during the checkout process.

1.Improving security begins with knowing who you’re protecting.

If a consumer buys with a credit card at a conventional store, the cashier will likely request identification. ID verification is less effective in online commerce since the identification is often verified via an email account. Despite the fact that email is not a very trustworthy identification since accounts may be created in bulk, most payment providers will use it as the main identity.

For this reason, it’s important to set up a more secure identify, even if it’s supplementary, such a cell phone number. Phone numbers are more secure than other forms of identification when it comes to verifying a person’s identity and doing business (usually via SMS or voice call). Using a tried-and-true method  of two factor authentication to validate purchases reduces the likelihood that customers may abandon their purchases in favour of something more interesting to do on their phones.

2.Use two-factor authentication when necessary.

A universal method of authentication does not exist. For both financial and regulatory reasons, it is important to establish authentication processes that vary based on factors like the amount being transferred, the kind of device being used, whether this is a one-time or recurring transaction, and so on. The security journey’s design will depend on a number of different aspects.

When there is a greater likelihood of fraud, such as with a large transaction amount, login from an odd device, or changes to a phone number, users should be prompted to provide extra two-factor authentication (risk of SIM swaps). By first determining the level of danger present depending on factors including where the user is, the configuration of their network equipment, whether or not they are using a mobile network, and the time of day.

3.Provide consumers with background information before interacting with them

Providing context to support silent authentication (with zero or less customer interaction) and offering contextual information when the customer needs to act are two ways in which the new EU payment regulation, PSD2, addresses a critical point to prevent fraud while making authentication more user-friendly. The Payment Service Directive 2 (PSD2) mandates that users be given access to information about a payment’s authentication, including the amount being sent and the identity of the payee, under the concept of dynamic linking.

This additional measure gives consumers a greater say over the information they choose to share and safeguard. A significant amount of fraud may be prevented if there are simple, fast ways to report suspicious activity, such as a phone number or chat feature, to an agent.

4.Authentication choices should be made available.

Several distinct authentication strategies exist to meet the varied demands of today’s businesses and their users.

Multiple authentication methods, as opposed to simply one, may be provided by a user-friendly authentication system. Hardware tokens, software tokens (also known as Time-based One-time Passwords, or TOTP), push, biometrics, and SMS/voice are the most widely used in the business. WhatsApp is also being utilised for verification purposes now.

Conclusion

Authentication that is simple to use and can be implemented all the way through the payment process and beyond is a game-changer for the security of payment providers, money transfer services, and other financial transactions. However, because authentication is such an integral aspect of your payment product, it must be deployed with careful planning rather than as an afterthought.

Voxvalley is able to provide trusted and most secure A2P SMS API services with dependable SMS gateway API platforms. These platforms are able to give significant client satisfaction, enhanced throughput, and high-end deliverability.