In recent years, e-commerce and online shopping have become prominent as they offer customers a more secure and convenient way to access goods and services quickly and without much hassle.
The COVID-19 pandemic, in particular, has further accelerated the use of digital payment channels, which prompt financial service providers to make online financial transactions and payment options more widely available and more secure.
The security of financial transactions must be prioritized as they require protection from fraud attempts, while customers and retailers need to protect their digital identities and personal information.
January this 2021, the PSD2 or Second EU Payment Service Directive was implemented to make Strong Customer Authentication (SCA) mandatory for all European banks and payment service providers. SCA is designed to provide additional protection for banks and customers from fraudulent activity that can compromise customer convenience and revenue opportunities.
There are three elements for strong customer authentication under the PSD2:
- Knowledge-based credentials such as PIN, password, or a one-time passcode.
- Possession such as mobile app and smart card.
- Inherence includes fingerprint scan, iris scan, or facial recognition.
When it comes to robust security measures, biometrics can play a significant role in digital identity verification. For the longest time, passwords have been the primary way to protect personal data and identity. However, they are easy to hack and compromise, especially today that fraudsters use tech-savvy tricks and sophisticated tactics to bypass security measures.
Below are three primary means by which fraudsters seek to circumvent strong customer authentication:
- Social engineering is a manipulation technique that tricks a user into providing compromising information like username or password. Most of these kinds of attacks rely on communication between fraudsters and victims.
- SIM Swapping is also called SIM jacking, which is a form of identity theft where criminals steal a victim’s phone number by assigning it to a new SIM card. Then they insert the original SIM to a different phone to gain access to other accounts.
- Malicious Accessibility is a tactic where hackers exploit unknown software or firmware vulnerability, also called a zero-day exploit. Once a hacker discovers a weakness in the software before prevention measures are taken, they engineer some software and make an attack.
Online retailers must be aware that passwords are inherently weak in online identity verification, which criminals seek to exploit. Therefore, they must consider biometrics authentication for identification and anti-spoofing.
Biometrics authentication is a cybersecurity process involving using a user’s biological characteristics to verify who they claim they are. It is highly effective for securing data and other confidential information as biometric characteristics are almost impossible to duplicate and bypass.
While such measures or specifications effectively increase the security of transactions, it is difficult for financial providers to implement and impact user experience; it effectively adds authentication security.
Organizations, merchants, and other issuers must realize that increasing the level of security and customer service can result in increased revenue potential, and the security interest of stakeholders can be better protected.
Do you want to learn more about stronger customer authentication? Visit LoginID’s website.