Confronting The Digital Authentication Payments Crisis

Jan 29, 2020

A very complex topic that is driving the future of payments and financial services is that of authenticating the consumer.  All participants within the payment chain, from the merchant to the service provider to processor and finally to the bank, have a vested interest in ensuring that the customer initiating the transaction is the lawful user.

However, the objective of establishing the identity in an accurate manner, with little friction towards the customer, at a reasonably low price for the merchant, has proven to be an incredibly tricky endeavor.

Adding another layer to the complexity and the headaches, thieves have become more sophisticated in their cyber crime exploits. Through countless data breaches and phishing scams, these cyber criminals have managed to amass a multitude of credential information.

PINs were historically used as a sure-fire way to authenticate, however, that has been superceded by newer methods such as facial recognition, fingerprint ID, and other biometric techniques.

Ken Allen, Senior Vice President of Operations at Socure, suggests that businesses should consider taking a “layered approach” to consumer authentication. Specifically, using social media accounts, emails, and even biometrics.

According to Allen, behaviors and social interactions are becoming the consumer’s identity, their fingerprints, and their biometrics. Even with all this revealing information, the next great challenge is “connecting all the dots” in a meaningful way, especially in this rapidly moving digital ecosystem. Customer interaction habits change fast, leaving FIs and merchants scrambling to make accurate decisions.

Without question, consumers want their purchasing experience to be personalized, yet secure. They also expect fast approval and no friction. When everything is expected to happen in real time, it does not leave a lot of time to make a good decision, complicating matters even more.

According to Socure’s research, there are four pillars to build a strategy around.

These are:

  • Consumer data: Biometrics, phone/email, name/address/ SSN
  • Behavior: Digital, credit/click-based, in-person
  • Device: Tokenized (loT, cloud), web/mobile, POS
  • Payment: Digital wallets, card/bank, cash

The aforementioned pillars are essentially, what Allen describes, is what “defines us as individuals.”

Behavior is rapidly becoming one of the strongest methods to predict real identity. Once enough verification is done in the form of looking at their data, their associated device, and a myriad of other details, you can then have a better way to connect these dots, make the associations and discover any abnormal behavior.

This is why merchants and FIs cannot focus efforts on only one pillar. There is no magic solution to this complicated problem. That is why businesses have to take on a multi-layered approach. The depth of the layer and which framework one focuses on is completely determined by the business. Grouping them together will demonstrate whether or not they interact well, if not, they can be taken apart.

Looking ahead

As indicated above, the multi-layered digital authentication approach remains as the most reliable and effective means to establish legal identity and deterring cybercriminals and fraudsters.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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