The PSD2 regulation enables an issuer to ‘delegate authority’ for authentication toa third-party (such as a merchant or wallet provider). The Visa Delegated Authentication (VDA) program allows clients and third-parties to choose to allow Visa to manage this delegation process. However, merchants must be eligible to participate in Visa Delegated Authentication program rules.
It is without doubt that the e-commerce market is growing rapidly, and so is payment fraud. One of the main motivations behind PSD2 is making payments safer and more secure. Strong customer authentication (SCA) is a vital part of this, but it is hard to ignore the impact of added security measures on the customer checkout experience.
So,how can Delegated Authentication help you win the battle between conversion andcompliance? Delegated Authentication is exciting due to the fact that it offers an alternative payment authentication without compromising on customer experience or security. With this technology, issuers can allow a third party to do the authentication. That could be an acquirer, digital wallet provider or you as the merchant.
Payment networks, including Visa and Mastercard, have started to offer Delegated Authentication broker programmes. Merchants that qualify can perform authentication through their own interface. Each scheme has its own conditions and criteria for registration. However, the benefit across the board is lower cart abandonment, greater control as well as an increase in transaction approval rates.
One of the areas that the visa delegated authentication program could be of great help in is reducing cart abandonment with fewer steps. It is a well-known fact that having an extra layer of security with electronic payments is valuable when it comes to tackling fraud. However, the added steps create friction. The good news is that with Delegated Authentication, customers are no longer redirected to the issuer interface. You can authenticate customers yourself, keeping them within your domain to offer an easy “one-click” purchase.
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