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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Card Networks Deploy Delegated Authentication: Everybody Wins!
Delegated Authentication Is Being Rolled Out in the EU: Will the Card Networks Benefit?
- Delegated Authentication is being rolled out in Europe, driven by the EU’s Revised Payments Service Directive (PSD2).
- While focused in Europe today, US merchants are very likely to ask for similar support in the near future.
- Customers have become so frustrated with limited password security that biometric support is likely to become a customer-driven mandate.
- Mercator research indicates that 90% of phones in the market will include some biometric capability by 2023.
- PSD2 mandates Strong Customer Authentication (SCA), which is necessary in both payments and larger open banking initiatives.
- The combination of payments, open banking, and SCA represents an opportunity for card networks to expand their role as intermediaries.
- Mercator believes that in large part, Visa’s Plaid acquisition is a plan to extend its network into digital infrastructure.
With Delegated Authentication, card networks enable merchants to control the entire cardholder experience. Issuers reduce costs while consumers can use biometrics for online shopping and passwords slowly fade away.
With Delegated Authentication, qualified merchants can use their own authentication process to approve purchases or pass the cardholder’s FIDO-based credential to the network for approval.