For many years, false declines and fraud have been a thorn in the side of online merchants, often creating immense frustration. In the industry, fraud is discussed and covered a great deal, with various publications giving updates and insights into fraudulent trends, patterns, etc. Comparatively, false declines aren’t really discussed nearly as much, despite being the bigger and more costly problem for online merchants.
False declines can be more damaging than fraud because they can eat away at a merchant’s consumer base, essentially chasing consumers to other online merchants who have made the consumer experience a priority.
The new version of the 3-D Secure protocols, however, will make it easier for merchants to solve the false declines problem, while simultaneously growing their consumer base and their business.
EMV® 3-D Secure (EMV 3DS) is going to create an environment where the merchant and the issuer share enhanced data with each other. By doing so, these new protocols can help the entire industry take a significant step towards eradicating the false decline problem that has plagued so many online merchants. This data will give both merchants and issuers even more insight into their consumers and their spending habits, which will allow them to make more informed risk decisions without disrupting the consumer and interrupting the checkout flow.
With EMV 3DS, if either party, the merchant or the issuer, does determine that a transaction looks strange or riskier than usual, they can issue a step-up challenge to the consumer, which will give them the chance to authenticate themselves. In the old world, step-ups primarily took the form of static passwords and knowledge-based questions, two unreliable and unsecure modes of authentication. In this new world, however, step-ups will be issued less than 5 percent of the time because the merchant and issuer will be using risk-based authentication.
If, during step-up authentication, a legitimate consumer forgot their password or the answer to their question, they would either be falsely declined or would abandon the transaction. EMV 3DS will enable consumers to use either a biometric or a one-time passcode to complete step-up authentication. Additionally, the merchant will have the ability to control the step-up process.
These new authentication methods, and the enhanced data will give consumers, merchants and issuers the chance to save a lot of transactions, which will, in turn, reduce false declines. But in this new digital commerce world, it’s still going to be important to utilize an authentication solution that can provide a greater level of control over the consumer experience. Cardinal’s rules-based solution, Cardinal Consumer Authentication (CCA), can do that and much more. With One Connection to Cardinal, we can Drive your Digital Commerce.
EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.