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For online businesses, customer authentication for internet payments is very crucial. An ever-increasing number of people apply for credit cards and shop online during the holiday season. With an increase in the usage of mobile phones, it is expected that 40% of all online shopping will likely be done through mobile devices.
On the other hand, the probability of fraud and account take over raises with this digital transformation, which is a matter of concern for all the stakeholders involved. Be it e-commerce sites selling products or customers making purchases, risk of scam and fraud threatens everyone. A 17% increase in fraudulent activities involving credit card fraud and chargeback scams was observed in 2018.
Cyber Mondays and Black Fridays provide a perfect environment for cybercriminals. According to an NRF survey, 164 million people plan to shop over a five-day Thanksgiving weekend and online sales alone are expected to reach $143 billion. With an increasing number of people shopping it becomes impossible to identify and deter frauds. Will it remain the same this year and years coming? Many e-commerce sites are researching ways that could help in the prevention of fraud.
One such solution that expert believes could come in handy is Biometric authentication.
What is BIometric Authentication?
Biometric Authentication secures web and mobile applications by seamlessly and continuously authenticating users based on their biometrics. While traditional authentication methods involve information that could be hacked using phishing and social engineering techniques, biometrics technology uses features that are unique to each user and can not be imitated, stolen or lost easily.
How Biometric Authentication system works?
Biometric Authentication technology uses biological data such as fingerprint, facial recognition, iris scan, and behavioral biometrics to approve any transaction by the user. With the synergy of Artificial Intelligence, the process has become really quick and legitimate customers are not obligated to put extra effort and time during the sign-in process.
The integration of facial verification and fingerprint pattern recognition systems in mobile phones has made it easy for customers to authenticate payments using biometrics. Since most of the online purchasing is done via smartphones, many e-commerce websites believe that online biometric authentication will be a great asset for the prevention of credit card fraud, identity theft, and chargeback scams.
Biometric Sign In and New Accounts Fraud
The holiday season is the best time for the fraudsters to carry out frauds, as the customers open new credit card accounts at great discounts. Owing to increased transactional activity, the chances for fraud detection reduces tremendously and fraudsters exploit the opportunity.
Using biometrics such as face or fingerprint provides an extra layer of security that is highly unlikely to be surpassed. When registering for a new account, the user will be prompted to enroll their face or fingerprints for the authentication in later stages of their journey on the online platform. Even if an intruder tries to access the newly created account, the system will flag suspicious activity.
Biometric Sign In and Chargeback Scams
While the holiday season is the ideal melting pot of chaos for both customers and sellers, this gives an ample amount of time for the criminals to find flaws in websites, databases, payment systems, and authentication/authorization systems. Once the criminals found a loophole in the system, it has a dreadful impact on the merchants- loss of merchandise, loss of customer trust, fake chargeback frauds, and the dumped chargebacks from the legitimate customers.
E-commerce platforms must take advantage of the most robust fraud prevention and ID validation technology to stop fraudsters from interrupting holiday sales. Online biometric authentication is the best way to defend against fraudsters. Once a user is authorized for the transaction using a biological feature, their consent is automatically linked, which reduces the probability of friendly fraud.
Sometimes it’s the small steps that make a big difference. Online marketplaces must adopt modern technology to stop chargeback frauds from happening.
Authorizing Merchants using Biometric Identification
While the payment systems are more vulnerable to scams and fraudulent activities, the merchant accounts are also exposed to criminals. Many criminals create fake merchant account on different online marketplaces and commit fraud. When a customer purchases something on these fake online stores, the fraudsters steal their credit card data and sell it on the dark web or use it to make illicit purchases from legitimate online stores.
Biometric authorization eliminates all these concerning threats. Biometric authentication means no passwords are involved, which means the user can’t be tricked into handing them over.
With an increase in online shopping trends, cybercriminals are evolving their fraud attacks at pace. The holiday season is the most vulnerable to these fraud attacks and many customers lose a small fortune during this period. Proactive detection and mitigation using biometric authentication can eliminate the costs to banks, merchants, customers, and credit card issuers. The financial institutes and online marketplaces must ensure that their systems are fully equipped to fight against cybercriminals and provide a seamless customer experience.