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Online credit card fraud is a major concern for enterprises, consumers and vendors alike. One of the biggest brands in the payment card space is Mastercard, which has been quietly working on implementing technology it has branded Mastercard Identity Check, in an effort to reduce fraud while making it easier for merchants to accept online payments.
Mastercard Identity Check is based on the EMV 3-D Secure (3DS) 2.0 specification that provides a layer of security for online payment card transactions when the payment card itself is not present for physical verification. With Identity Check, Mastercard is integrating machine learning artificial intelligence capabilities that verify more than 150 variables as part of a transaction process to help credit card issuing financial institutions make rapid, accurate decisions.
“Our overarching mission is how do we make payments safe, simple and smart,” Chris Reid, executive vice president of security and data services, North America, Mastercard, told eWEEK. “What we’re aiming to do now fundamentally is leverage new technology to narrow the gap from where we’re at today in digital to where we are today in the physical world.”
EMV (Europay, Mastercard, Visa) is the chip technology that is now integrated with many credit cards issued around the world. The promise of EMV is increased security over the older magnetic stripe approach and the reduction of fraud. Reid said that with EMV, credit card payment authorization rates are in the high 90 percentile range for acceptance globally. In contrast, in the digital realm, which Mastercard often refers to as “Card Not Present” transactions, authorization approval rates are lower.
With the 2.0 version of the EMV 3-D Secure specification, 10 times more data than what was possible with version 1.0 of the specification can be passed through on each transaction, providing financial institutions with more data points on which to base a payment authorization decision, according to Reid.
“The more data you can have in a decision, generally the more accurate you’re going to be able to make that decision,” he said.
While Mastercard Identity Check makes use of EMV 3-D Secure 2.0, it goes beyond what the core specification enables, with both passive and behavioral analytics capabilities for the collected data. The analytics technology is able to analyze collected data and make more accurate suggestions about authorization requests.
Reid said there are multiple ways the technology looks at user behavior. For example, one data point can be if the user is moving their mouse or trackpad in a way that is consistent with past transactions and, more importantly, human behavior. One of the large issues financial institutions and retailers have to deal with is the rise of automated bots that look to execute various types of online fraud.
Frictionless Authentication
EMV 3-D Secure 2.0 is an update for the 1.0 version of the specification, which only collected 15 data points from a transaction. Reid explained that with the 1.0 specification, if there were an issue, the financial institution could implement a challenge/response mechanism with merchants. That approach introduced additional latency into a payment cycle, which is something that Mastercard Identity Check is looking to minimize.
“We’ve introduced what we call frictionless authentication, or a data-only version of 3D Secure that is inherently reducing the time for the protocol to take effect,” Reid said. “What we’re effectively doing is we’re absorbing all of those different data elements, we’re applying our artificial intelligence and machine learning in real time, and we’re sending that to issuers in a score in order for them to be able to make the decision.”
Reid said that as part of the Mastercard Identity Check early adopter program, a number of larger Mastercard customers have deployed the technology and found that they could reduce authorization latency by a measurable amount. The Mastercard Identity Check program is now being incrementally rolled out globally to financial services providers and merchants. For consumers and businesses using Mastercard for payment, Reid said the Identity Check technology is transparent and will help limit the risk of false positives for payment authorization requests.
“The vast majority of the time by design, we’re actually aiming for the technology to be in the background,” Reid said. “I think we’re setting ourselves up to deliver a much better consumer experience.”
Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.