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In the wake of frequent data breaches, one-time password (OTP) verification has rapidly replaced knowledge-based questions as the stepped-up authentication standard for the card industry.
Changes have come into affect this September as part of the second Payment Services Directive or PSD2 which requires all banks to introduce stronger customer authentication for online purchases.
The move could cause confusion for some customers that may not initially trust a text message when making online payments, especially if they are unaware of this new level of security. Customers of all banks that issue Visa debit and credit cards will be affected by the change.
Two-factor authentication is a second layer of security which is used to protect an account, system - and in this case, transactions online. It increases the safety of online accounts by requiring two types of information from the user, such as a password or PIN, an e-mail account, credit and debit card or fingerprint, before the user can log-in or transact.
Most banks and many online stores have written to their customers to inform them of the changes. For operators we encourage you to inform your customers about the changes. Remind them that they should have the correct email address, as well as current mobile number registered with their bank to ensure the continuation of smooth online payments. It is likely that without the correct contact details many banks will not be able to confirm a transaction is genuine causing online payment processing issues.
Our industry deals with a variety of customers from all age groups therefore Visa and Mastercard will be working with their customers to provide mechanisms to support the changes.
Visa have said that... although all Visa card-issuing banks will support this increased level of security, alternatives are available should customers feel uncomfortable or unable to use a OTP. Customers should contact their card-issuing bank to discuss their options. Visa goes onto say that alternatives include use of partial password entry, knowledge based questions or physical tokens. It adds that the change will roll out across the industry by the time PSD2 (Revised Payment Service Directive) lands in September 2019, regardless of your card scheme.
Check out GladstonePay to simplify your customers online payment experience, with stored credit card tokens. Ask your Gladstone Account Manager about beating your current payment gateway fees - we believe we could save operators up to 50%.