Pushing Back the Online Fraud Wave with Multi-Factor Authentication

By Michael Lynch, Chief Strategy Officer March 17, 2017


Since EMV chip technology began to take hold in the US, it has begun pushing fraudsters out of the point-of-sale channel and into the online channel.

Whether shoppers use their mobile device, a tablet or their PC to interact with merchants, the online channel is vulnerable to fraud and cyberattacks, from card-not-present and application fraud, to account takeover, malware/crimeware and bots.  

For merchants, the challenge is how to tighten security without hindering transactions and creating unnecessary friction for customers.  With a shopping cart abandonment rate of 69% for the last 11 years running, according to the Baymard Institute, it’s understandable why the thought of adding more friction to tighten security strikes fear in the hearts of retailers.  

Fighting Fraud, Easing Friction

Multi-factor authentication (MFA) is the use of multiple factors to identify every transaction: something you know (a password for example), something you have (a secure token or the mobile device itself can serve in such a capacity) and something you are (such as a biometric fingerprint). A multi-factor authentication strategy layers these factors together for the highest degree of security. 

To implement such a strategy requires advanced device intelligence and risk analysis tools that enable you to view customers more holistically and therefore make more confident transaction decisions.  Such deep device intelligence has two main benefits:

  1. It provides a permanent way to identify each device interacting with your business
  2. It validates the trustworthiness of the device

MFA is designed to gather as much contextual information as possible from all parts of the interaction, whether that is the customer, the device or other authentication information. This offers the ability to make a fully informed choice in real time to accept, reject or review.

When merchants are better able to recognize and trust returning devices, they can then allow more customers to transact faster and with greater ease, while simultaneously preventing fraud and stopping potential cyberthreats.  These technologies can, in fact, enhance the user experience by simplifying the shopping experience, reducing shopping cart abandonment rates and enabling merchants to introduce innovations like one-click buying, without the fear of increased risk.

The ability to dramatically reduce the risk of fraud while delivering an elegant online customer experience no longer has to be mutually exclusive. With confidence in each transaction, merchants can fully leverage the online channel to attract new business opportunities and compete more effectively.

About the Author

Michael Lynch is InAuth’s Chief Strategy Officer and is responsible for developing and leading the company’s new products strategy, as well as developing key US and international partnerships. He brings two decades of experience in key roles within financial services, consulting, and Fortune 500 companies, specializing in security and technology leadership.