"The European Banking Authority (EBA) has issued a new Opinion that provides the European payments industry with an EU-wide additional 15 months to comply with strong customer authentication (SCA) requirements for online ecommerce transactions."
Since there are banks that are already in compliance, the solution for consumers is to do business only with those banks.
While there is no international law on this, there is good banking practice that is universal. All banks have an obligation to "know their customers," and to ensure that "transactions are properly authorized." Passwords that are vulnerable to fraudulent reuse do not meet these standards of good practice.
In an era when most customers have e-mail, mobile computers, or both, strong authentication is not sufficiently difficult to implement to justify an extension. This is an example of "regulatory capture." The authority is derelict. It is serving banks rather than customers. Shame.
Showing posts with label Strong authentication Two-factor authentication. Show all posts
Showing posts with label Strong authentication Two-factor authentication. Show all posts
Sunday, October 20, 2019
Friday, October 20, 2017
MasterCard to Eliminate Signatures
MasterCard has announced that in the US and Canada, it will no longer require signatures on credit card transactions. (PINs will continue to be required on debit card transactions.) MC says that this will be more convenient for the customer and that it will rely on other (unnamed) mechanisms and processes for security. Let us look at some.
First, many issuers use computer aided mechanisms to detect fraudulent use by looking at such clues as location and other patterns of use. Most of us have had calls from our banks checking on the legitimacy of activity.
In theory, the required signature resists fraudulent use of lost or stolen cards. In practice, not so much. Even when clerks reconciled the signature on the check to the one on the card, it was an imperfect mechanism. In modern systems, where no one really reconciles the signature, the best that the mechanism can do is to permit the consumer to recognize disputed items that he really did sign. However, for the most part, issuers simply accept the word of the consumer that a transaction is fraudulent. The signature does not come into play.
The best way to resist the fraudulent use of lost or stolen cards is to check that a proffered card has not been reported lost or stolen. This works well in the US and Canada, where most transactions take place on line. In countries where many transactions take place off line, PINs are used.
American Express CEO, Kenneth Chennault told President Obama that Am Ex detects many fraudulent transactions within 60 seconds by sending a notification of use to the consumer’s mobile or e-mail in real time.
Bank of America and others resist fraudulent use by permitting the consumer to turn the card on and off using an app. Again, works well where most transactions are on line.
Android, Apple, and Samsung Pay resist fraudulent use by simply taking the card out of the transaction and substituting a digital token for the credit card number. Lost mobile phones resist fraudulent reuse with PINs for security and biometrics, e.g. facial and fingerprint recognition, for convenience.
On line merchants have never had the benefit of signatures but can resist fraud by using PayPal or other proxies instead of accepting credit cards at check out. Where the merchants cooperate and the consumer uses Ámerican Express at checkout, AmEx will prompt the user for a one-time-password sent to the users mobile. This protects the merchant, the consumer and AmEx. All of these resist “card not present” fraud.
Only the brands and issuers really know how necessary and effective signatures and PINs are: they take the risk when they are not required.
The fundamental vulnerability in the retail payment system is the credit card number in the clear on the magnetic stripe. Remains a risk to merchants and issuers but is only a nuisance to the consumer.
In short, the future is mobile, tokenized, cordless, contactless, signature and Pin less, and secure.
First, many issuers use computer aided mechanisms to detect fraudulent use by looking at such clues as location and other patterns of use. Most of us have had calls from our banks checking on the legitimacy of activity.
In theory, the required signature resists fraudulent use of lost or stolen cards. In practice, not so much. Even when clerks reconciled the signature on the check to the one on the card, it was an imperfect mechanism. In modern systems, where no one really reconciles the signature, the best that the mechanism can do is to permit the consumer to recognize disputed items that he really did sign. However, for the most part, issuers simply accept the word of the consumer that a transaction is fraudulent. The signature does not come into play.
The best way to resist the fraudulent use of lost or stolen cards is to check that a proffered card has not been reported lost or stolen. This works well in the US and Canada, where most transactions take place on line. In countries where many transactions take place off line, PINs are used.
American Express CEO, Kenneth Chennault told President Obama that Am Ex detects many fraudulent transactions within 60 seconds by sending a notification of use to the consumer’s mobile or e-mail in real time.
Bank of America and others resist fraudulent use by permitting the consumer to turn the card on and off using an app. Again, works well where most transactions are on line.
Android, Apple, and Samsung Pay resist fraudulent use by simply taking the card out of the transaction and substituting a digital token for the credit card number. Lost mobile phones resist fraudulent reuse with PINs for security and biometrics, e.g. facial and fingerprint recognition, for convenience.
On line merchants have never had the benefit of signatures but can resist fraud by using PayPal or other proxies instead of accepting credit cards at check out. Where the merchants cooperate and the consumer uses Ámerican Express at checkout, AmEx will prompt the user for a one-time-password sent to the users mobile. This protects the merchant, the consumer and AmEx. All of these resist “card not present” fraud.
Only the brands and issuers really know how necessary and effective signatures and PINs are: they take the risk when they are not required.
The fundamental vulnerability in the retail payment system is the credit card number in the clear on the magnetic stripe. Remains a risk to merchants and issuers but is only a nuisance to the consumer.
In short, the future is mobile, tokenized, cordless, contactless, signature and Pin less, and secure.
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