Now that we’ve discussed all the benefits of enhanced data-sharing, we can look at some of the use cases that it will help address and improve, beginning with the false decline problem. Fraud often garners a lot of the headlines and all the bad press but, in reality, false declines are actually more prevalent and damaging to many in the digital payments community.
When a company is hacked, and confidential information is stolen, we hear about it, typically through a big news publication. But false declines often go unnoticed, at least outside of our little world. They occur without any fanfare, but with all the same ramifications.
A false decline is a specific type of transaction, where a legitimate consumer is turned away by their issuing bank because they’re deemed to be a fraudster, or because their issuing bank determined that there was insufficient information or data to successfully authenticate the transaction.
The core of this problem is the issuer’s inability to recognize their own consumers. Unlike fraud, where a consumer is likely notified that a breach has occurred, one way or another, false declines can continue to affect the same consumer over and over again since there’s a decent chance that they don’t know why they’re being declined.
There is, however, a solution. EMV® 3-D Secure is empowering issuers, giving them more resources and data, which helps immensely in the fight against false declines. If these issuers are armed with more data, they won’t be placed in as many compromising positions where they’re essentially forced to decline a good consumer to preserve their own security. Instead, they will have enough good, useful data to authenticate these transactions and mitigate their own false decline problem.
This should lead to more good interactions with the consumer during their transaction, which is yet another area where more data-sharing will help. We’ll go more in-depth with this particular area next week, and how the consumer is directly impacted by this evolution.
At the end of the day, we want all legitimate consumers to have the ability to shop freely in the digital world, free from the burdens of fraud and false declines. The false decline problem is still out there, but we’re confident that EMV 3DS is giving issuers the tools to make them a thing of the past.
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