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COVID-19: Updating online checkout security is essential

Apr 30, 2020

Payments security must remain a priority for online businesses during COVID-19, which is why updating their checkouts now to be 3DS2-compliant now is critical.

One of the social consequences of the COVID-19 pandemic, and more specifically the social distancing measures governments around the global are enforcing to curb the virus spread, is that people are shopping online more. On one hand, this should be positive news for online retailers.

However, even in times of global crisis, cybercriminals are on the lookout for ways to exploit unsuspecting targets. In fact, Action Fraud reported a 400% increase in COVID-19 related fraud in the UK between 1 February 2020 and 18 March 2020.

Most of these incidents involved online shopping scams enticing consumers to order unusual products such as protective masks and hand sanitiser from unfamiliar vendors. These products then never arrive. But there are other ways that scammers are increasingly preying on people’s fear and anxiety; the past few months have also seen an increase in phishing attacks, fake websites and incidents of shipping fraud.

And consumers aren’t the only victim of fraud. It’s still too soon to assess the scale of the impact on business operations, but experts agree that the threat of increased fraudulent activity to businesses is likely to increase also.

Setting yourself up for success

Small businesses have already been severely impacted by COVID-19, so the effect of further damage such as fraudsters making payments using stolen or fake credit cards is even more catastrophic. For those that are able to offer online shopping services, it’s never been more important to secure your checkout and protect your business and your customers from falling victim to cybercrime and online fraudsters.

But historically this hasn’t been a simple issue to solve.70% of online small-to-medium-sized businesses have told us that they struggle to find a balance between improving security measures and their other primary objective at the checkout; maximising the customer experience at the checkout to minimise abandoned transactions.

Our research also revealed that security is the top priority for online businesses when selecting a payment service provider. 81% of online merchants believe that it’s the responsibility of their payment service provider to protect them from fraud, and a further 59% cited security as a critical factor to consider when deciding which service providers to partner with, ahead of reliability (49%) and cost (47%).

Fraud also remains a serious issue for all businesses. Over a third (36%) saw credit cards as the most vulnerable method of payment.

Convenience vs security: Why 3DS2 offers online business the best of both worlds

One of the best ways to keep your business and customers safe is to migrate to 3DS2 immediately. 3DS2 is the long-awaited upgrade of 3D Secure Authentication, the EMV verification protocol for processing card payments online securely. The new and improved 3DS2 builds on this and now enables mobile support and biometric validation. Most importantly it streamlines and secures the checkout experience for the customer, resulting in less cart abandonment, a better conversion rate and much more robust security for e-commerce businesses.

All online businesses operating in Europe are mandated to integrate 3DS2 into their checkouts by the end of 2020, in accordance with the deadline to adopt Strong Customer Authentication un PSD2. From January 2021 card payments that are not authenticated via 3DS2 will be automatically declined by card issuers, meaning that online businesses that haven’t integrated 3DS2 cannot accept any card payments. We expect that the rate of card declines for non-3DS2 authenticated payments will increase steadily leading up to the deadline as issuers take a risk-based approach to authentication.

Avoiding a dramatic increase in card declines is a key reason for merchants to integrate a 3DS2 solution into their checkouts, but there are also additional benefits to merchants and consumers that should persuade businesses to implement 3DS2 as soon as possible.

For example, unlike the current 3DS authentication, 3DS2 is optimised across all eCommerce devices including mobile. This is critical as, according to our research, more Millennial (79%) and Gen Z (72%) consumers shop regularly via their smartphone than any other device including a laptop or desktop computer.

3DS2 also improves customer experience by giving consumers more choice over how they authenticate payments. In addition, passive sharing of more than 100 data points (10x the current volume) for each transaction enables issuers to perform better risk analysis, which results in significant improvements in fraud prevention without compromising a consumer’s checkout experience.

In this time of crisis, two of the greatest hurdles to overcome for eCommerce businesses are satisfying consumer demand for greater flexibility in the way they pay, and offering a slicker, more seamless checkout experience while giving the customer peace of mind that the payment is secure.

As a result, merchants need a payment service provider that can be adaptable and mindful of the bigger picture of solutions as the market evolves. While the pandemic will pass, it offers lessons for dealing with other global events in the future. Now is the time to take steps to safeguard your business against fraud and future proof your checkout in order to remain competitive with industry leaders and retail giants. Integrating PSD2 into your checkout as soon as possible means your business and your customers have the best chance of being protected from being a victim of fraud during this during these uncertain times.

Tags:
  • 3DS 2.0,
  • Acquiring,
  • Card not present,
  • Checkout,
  • Security,

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