How Delegated Authentication and Payment Authentication Work with PSD2?

The rise of digital payments has given way to a new era of consumer convenience, with merchants implementing innovative digital shopping and payment experiences. The recent COVID-19 outbreak has highlighted the need for a new approach to payment security. Further, the intense growth of E-commerce is evidenced by the 18% global increase in first-time internet users. Ultimately, this means that the future of E-commerce is bright, and merchants should take advantage of these new security standards.

PSD2 mandates that SCA authentication is used for all payments, and issuers should comply with this requirement. A merchant can determine the type of authentication its customers require based on their knowledge and behavioral patterns and then authenticate transactions for consumers logged in on the site. By using these new security measures, merchants can create a frictionless checkout process that does not rely on 3DS, improving conversion rates and customer experience.

Although this new security measure might sound ambitious initially, the technical implementation can be relatively simple if the merchant chooses the right service provider. Using a broker model and the right service provider can help you seamlessly implement Delegated Authentication and Payment Authentication. With this method, issuers can trust the authentication request and approve the transaction without requiring further user authentication on the merchant’s site. Further, merchants can control their user experience and maintain customer relationships.

PSD2 has introduced new security measures, including heightened transparency and increased customer protection. For example, it prohibits companies from charging additional fees for credit card purchases. Further, payment processors must use multi-factor authentication. The new security measures protect the consumer’s data and accounts. The security measures implemented by PSD2 also help protect the merchant’s business against hacking.

Strong Customer Authentication is crucial for payment security. PSD2 requires a digital signature or two-factor authentication. Mobile NFC is an exception to this rule, as it is a mobile payment technology. Digital checkout applications, or remote payments, are considered PSD2-compliant. In these cases, the digital checkout application triggers the 3D-Secure protocol and redirects the transaction to the issuing bank interface.

If you want to learn more about how delegated authentication and payment authentication work with PSD2, you can read this infographic from LoginID. You can also visit their website for more professional help in terms of the latest security systems.