The PSD2 regulation enables issuers to ‘delegate authority’ for authentication to a third-party (such as a wallet provider or merchant). The Visa Delegated Authentication program enables clients and third-parties tochoose to allow Visa to manage this delegation process. Merchants must be eligible to participate inVisa Delegated Authentication program rules, so make sure that you consult your activation manager. Minimum requirements will require a Visa Merchant Id provisioned by Visa in order to participate.
In the traditional payment flow, authentication is carried out by the issuer.Delegated authentication means that the merchant can directly authenticate the customer, meaning that they skip the redirection to the issuer and facilitate the ‘one-click purchase’ experience. It is logical that customers would make purchases more often when the payment process is simplified using delegated authentication, something that will in turn lead to higher conversion rates.
While this seems like an obvious solution, one would wonder why it was not in use before. There were significant barriers to putting this technology into practice. Since issuers were the only parties that were able to authenticate customers and authorize transactions in the past, this authentication method requires agreements between the respective merchant and issuers.
Dependingon where customers are located, this could turn out to be a laborious processthat involves many (international) issuers or banks. However, recently, major card networks such as MasterCard and Visa have started offering a brokerage programme where the merchants who partner with them only need to have bilateral agreement instead of concluding contracts with a long list of issuers. This has helped simplify the process for merchants, while increasing trust between them and issuers, as MasterCard and Visa provide credibility and validity to the authentication.
For more information on the VISA delegatedauthentication program, visit our website at https://loginid.io/
