Report: CNP Fraud Going Up, Regardless of EMV
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User Rank: Author
11/11/2014 | 5:41:06 PM
Re: CNP & Biometric
Ypu make some very good points! Obviosuly EMV will help very little with CNP fraud, but the points uoi outline could definitely go a long way.
User Rank: Author
11/11/2014 | 5:33:40 PM
Re: CNP & Biometric
Thanks for your comment. I definitely think that biometrics will play a big role in security, probably coupled with tokenization. I think ApplePay got it right using those two together, even if their solution isn't perfect. In the end there has to be collaboration between the retailers and banks on this. That collaboration will be the key, and it could take many different forms.
User Rank: Apprentice
11/11/2014 | 1:16:13 PM
CNP & Biometric
Jonathan excellent write up but I believe we can bring change with CNP in spite of it being not supported via EMV

Today's digital ecosystem (based on the wide spread proliferation of smart gadgets) allows capture of biometric details of a user like voice, fingerprint with much ease.

The challenge lies with merchants' strategy around CNP based payments. I agree the statement in your article that "It could be advantageous to give the online retailers a break on interchange if they are doing the right thing security wise. [The banks] can help them with the cost of CNP interchange, which goes back to CNP fraud risk. It should be some carrot, and not the stick all the time."

There are ways to widen the "pie" so that retail online merchants and issuing bank can get Ricardian rent by introducing changes within its existing resource and delighting clients. The resources in this case are online system for retailers and bank's chargeback spend/fees. The overall ROIC for the change should bring in NPV positive outcome for these 2 primary players.

Few strategic changes that can widen the "pie"

·         Merchant's promote expedited delivery service for a biometric based user interaction (as the probability of fraud is minimized)

·         Issuer Bank to allow some form of incentives like Reward points to biometric based user interaction (as the probability of chargeback due to fraud is minimized, thus having +ve impact on Bank's Cash management)

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