With the rise of eCommerce and people transacting online, it makes sense that the digital payment market has skyrocketed. In truth, Fortune Business Insights predicted that the digital payment market would grow by almost 25% by 2026 amounting to $20 trillion.
Many prefer cashless transactions as a more convenient and fast payment method. Today, businesses across all industries utilize this and leverage its advantages for a seamless checkout experience for users. However, as more and more organizations rely on digital payments, bad actors committing fraudulent activities are also on the rise.
The global eCommerce has significantly suffered billions of losses due to online fraud. Considering the frequency and threats of cyber attacks, it heightens the need for strong real-time fraud prevention campaigns to protect users.
In light of this issue, the European Union or EU implemented the revised Payment Services Directive or PSD2 which is a European regulation for electronic payment services. PSD2 mandates Third Party Payment Providers (TPPs) in the European Economic Area (EEA) to integrate strong customer authentication into their services.
Additionally, this European regulation seeks to improve customer protection, boost innovation, and reinforce security in the payments market. Businesses that aim to employ robust security solutions to enhance their cybersecurity while complying with PSD2 policies can trust LoginID.
LoginID offers delegated authentication and payment authentication solutions. Unlike the traditional payment flow where the retailer is the one who fulfills authentication requirements, delegated authentication allows an outside authentication provider to do this. Thus, delegated authentication component of PSD2 can simplify the payment authentication process.
On the other hand, Fintech industries integrate various payment authentication schemes to confirm a transaction’s validity. Aside from the use of a one-time password or OTP sent to a user’s phone, security verification also includes challenge questions and other passwordless authentication UX methods.
Like delegated authentication, payment authentication allows payment service providers to provide robust security compared to traditional security methods.
PSD2 can effectively prevent fraud in online payments. With that being said, companies, specifically Third Party Payment Providers must comply with PSD2 regulations regardless of the objectives. LoginID provides FIDO-certified passwordless confirmation schemes to improve the overall security policies of companies and their clients.
You can learn more about how delegated authentication and payment authentication work with PSD2 in this article from LoginID.
