In a white paper launched today, leading global payments company Visa sets out its vision for delivering a frictionless checkout experience and greater security in online shopping.
Reduce online risk and friction through RBA
By combining existing security protocols such as 3DS with advanced techniques, Visa’s white paper shows it’s possible to reduce the number of stepped up authentications by as much as two-thirds with no impact on fraud.
The global economy is going digital, with e-commerce forming an ever-higher percentage of overall spend.
When shopping online, consumers increasingly prefer to use mobile devices – as much as two-thirds[1] of the growth in e-commerce last year came via the mobile channel.
As this digital revolution continues, the financial services industry is being challenged to deliver higher levels of transaction security seamlessly integrated into the user experience.
To date, banks have had to manage a trade-off between transaction security on the one hand and a seamless customer experience on the other.
While the EU’s second Payment Services Directive (PSD2) set out a framework for secure digital commerce through its Strong Customer Authentication (SCA) requirements, but at the same time introduces a number of SCA exemptions, Visa data suggests that up to 75% of all transactions[2] across Europe are currently subject to stepped up authentications under SCA.
This has led to increases in abandoned transactions, as consumers grow frustrated with repeated authentication requests.
Success so far – but more to be done
In Deliver more frictionless payment experiences and reduce risk with RBA, Visa argue that despite the success of EMV® 3D-Secure (3DS)[3] in reducing fraud rates wherever it has been deployed, more needs to be done to maximise the potential of 3DS and close the gap between the security of digital transactions and that of in-person payments while delivering a seamless customer experience.
In their white paper, Visa explain how it’s possible to employ PSD2’s Transaction Risk Analysis (TRA) exemption to reduce the number of transactions subject to stepped up authentication under SCA.
The white paper outlines how Issuers can use rich data provided by the 3DS standard to make smart decisions to inform TRA exemptions.
To help all European Issuers make the most of TRA exemptions, Visa has introduced a new RBA score proposition which builds on its global view of 3DS transactions and employs modern AI technologies.
Huge lakes of transaction data processed by Visa have enabled the development of sophisticated transaction typologies powered by machine learning.
These typologies are used to generate a RBA score. Based on this score, Issuers can define according to their internal policies what is the best balance between fraud levels and challenge rates.
The Visa RBA score for each transaction is populated directly within 3DS messaging, making it easier for Issuers to use and helping to avoid complex IT integrations.
Visa’s RBA system helps Issuers dramatically cut the number of authentication challenges users experience.
To date, Issuers using RBA technologies in conjunction with the 3DS security protocol have seen challenge rates decline from around 75% to less than 25%[4] with no impact on fraud.
Digital commerce has created new opportunities for hundreds of millions of consumers, enabling them to access new markets, products and services from their computers and, increasingly, their mobile device.
If this strong developmental path is to continue, transaction friction and fraud risk must be reduced.
Visa’s RBA realises the promise of PSD2, delivering more accurate authentication decisions, improving conversions and reducing risk without the need for extensive staff training programmes or complex integrations.
Download a free copy of Visa’s new white paper to learn more about more frictionless transactions, lower risk and improved compliance using risk-based analysis with 3DS.
[1] Forbes, 25 June 2021, “Behind the growth in mobile commerce”
[2] Visa DS Data, November 2022, EMV 3DS Abandonment is calculated by generating the ‘abandonment count’ of failed authentications and divided by total authentication volume (both frictionless and challenged)
[3] EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.
[4] Visa DS Data, November 2022, EMV 3DS Abandonment is calculated by generating the ‘abandonment count’ of failed authentications and divided by total authentication volume (both frictionless and challenged)
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