Recently, there has been an increase in data breaches, account takeover attacks, and identity theft. Committing such fraudulent activities is also heightened due to the COVID-19 outbreak, which prompts businesses to employ a more secure authentication method to counter fraud.
Consequently, the Payment Service Providers Directive, or PSD2, is implemented in several European countries, which addresses the need for stronger customer authentication (SCA) for merchants and issuers.
Identity verification is an important factor in ensuring that a person is who they claim to be, whether it is using a service, opening a bank account, applying for a loan, or participating in other financial operations in general.
Not only does having a secure identity verification can help combat fraud, but it also plays a role in the Know Your Customer and Anti-Money Laundering efforts for financial institutions.
Even Visa has recognized its role in promoting a secure payment experience for clients and a frictionless transaction while ensuring compliancewith PSD2 regulations. Accordingly, they can integrate and scale strong authentication with a visa delegated authentication programat a low cost.
When it comes to a more secure identity verification method,businesses must consider biometric authentication.
Under the PSD2, to ensure a strong authentication, the list of elements below must be met:
- Something you known, such as a PIN Number or Password
- Something you owned, like a mobile phone, laptop, or security key
- Something inherent, like a fingerprint or a face ID
Moreover, biometric authentication can also better protect a digital wallet. There has also been an increase in fraud in the crypto space, which heightens the need for digital wallets to enact real-time fraud prevention measures.
Should a digital wallet be compromised, it can take mere minutes to drain all their crypto, and only a few reliable measures for recovery are possible. Instituting a multi-factor authentication solution by combining biometrics and traditional PINs or passwords can reduce security vulnerability.
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