Transaction Security

Selected Industry Trends
Difficulty Managing the Payment Ecosystem Leads to Frictions and Inefficiencies
Traditional card-not-present security and fraud measures taken by merchants and
issuers can be overly restrictive and create unnecessary friction in the checkout process,
thus resulting in a large acceptance gap between card-present and card-not-present
acceptance rates
Poor User
Experience …
• Consumers want simple, fast, friction-free checkout, however, they
often need to manage multiple payment types and passwords
• Intrusive identification requests can create unnecessary friction
• Poor user experience can lead to purchase abandonment, which hurts
sales and negatively impacts brand image
… Creates an
Acceptance
Gap
• Large disparity in purchase authorization rates between card-present
transactions and card-not-present transactions
• Disparity in authorization rates due to an infrastructure that was never
designed for CNP transactions
• Banks are more suspicious of card-not-present transactions
‒ POS systems have location of buyer (at the exact store location)
‒ Consumer could be anywhere in a CNP transaction
‒ CNP transactions present a systematic risk to banks
• Data breaches / fraud are more common
‒ Credit card information breaches have become more prevalent
‒ Stolen card number are widely available if you know where to look
• Merchants are refusing transactions from certain geographic regions
‒ Some merchants exclude international orders (even Canada)
‒ Tight fraud screening criteria
• Huge opportunity exists to increase CNP authorization rates without adding
significant additional frictions or increasing fraud rates, which would result in
increased merchant sales
Authorization rates for CNP
transactions are markedly lower
than card-present transactions
Card-Present
Acceptance
Gap
Card-Not-Present
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