A card-not-present (CNP) transaction is any transaction where the magnetic strip is not swiped, the EMV chip not inserted, or the mobile wallet not tapped against a physical terminal, which is basically every online or over-the-phone payment.
Fueled by a strong pandemic tailwind, global ecommerce sales – and hence CNP transactions – exceeded $3.9T in 2020. But CNP transactions also present a higher fraud risk to consumers, merchants, and card issuing banks. Research shows that retail alone is expected to lose $130B to CNP fraud between 2018 and 2023. Each party has some level of exposure – consumers if they don’t adequately protecting their credentials, merchants if they accept questionable transactions, and payment providers when not proactively flagging and addressing suspect transactions with advanced authentication.
To instill consumer and merchant confidence in their cards, payment providers have largely absorbed CNP fraud losses to date. However, with exponential growth in ecommerce only expected to accelerate, such policies are no longer viable. Equally untenable are proposed shifts in CNP fraud loss liability to consumers and/or merchants which would directly and adversely impact cardholder retention and transaction volume. Loss attribution aside, rampant CNP fraud can also negatively impact a bank’s reputation, customer satisfaction and retention.
Enter 3-Domain Secure – also referred to as 3D Secure and 3-DS – which is a card payment industry specification for CNP transactions designed to strengthen security without adversely impacting consumer experience. Entrust has partnered with leading 3DS provider, Netcetera, to flag suspect CNP transactions and challenge the consumer with step-up authentication before transaction completion. The consumer verifies their identity and stops fraud before it happens. Furthermore, 3DS complies with PSD2 criteria (an EU Directive which sets requirements for payment services) for CNP payments.
With 3DS adoption, consumers can feel secure about using their debit/credit cards for online purchases, merchants avoid fraud losses and abandoned carts, and card issuers limit their own fraud risk while increasing card usage and transaction volume. To learn more, join Netcetera and Entrust for this webinar.