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Why do merchants not use it in the US? It's pretty much universal in Europe and many countries in Asia in my experience, and it would probably almost eliminate
by jhugo 4y ago
Why do merchants not use it in the US? It's pretty much universal in Europe and many countries in Asia in my experience, and it would probably almost eliminate this type of fraud. Most of my banks give me an in-app notification in the mobile banking app that I have to accept, but some still use an SMS OTP.
- deleted 4y ago[deleted]
- bombcar 4y agoBecause most American customers have no idea what the hell it is or how to do it, and when it appears would wander off and find some thing else to purchase elsewhere.
- sbierwagen 4y agoIf your fraud rate is 2% and turning on OTP adds 4% to your bounce rate then turning on OTP is net negative. Classic collective action problem. I'd guess the feds will mandate it at some point in the future, like how it took a decade for EMV to be mandatory in the US.
- willnonya 4y agoI think you've identified why in your response. If you're buying something from a website then it's not an issue. If you're buying something in person relying on an app or other otp will result in fewer people wanting to bother with it or more false negatives both of which reduce transactions (and fees) by more than the cost of the fraud on the card issuer.
- SyneRyder 4y agoSecureCode / Verified By Visa / 3DSecure can cause huge crashes in conversion rates. This is old data, but at one point it was a 10-12% drop in sales: https://www.practicalecommerce.com/Are-Verified-by-Visa-and-MasterCard-SecureCode-Conversion-Killers https://www.practicalecommerce.com/Are-Verified-by-Visa-and-... Visa / MC require you to keep your fraud rates under 1-2% anyway, so 12% is an enormous hit to only slightly improve your fraud rates.
- jon-wood 4y agoI’d like to see those numbers scoped to UK/EU cards in recent years. 2FA for payments is almost universal, has been for years, and is almost no effort at all - either tap a notification or enter a code sent by SMS to you.
- SyneRyder 4y agoTook some digging, but I found a Visa submission to the EU / European Banking Authority stating that cart abandonment due to Verified By Visa / 3D Secure was nearly 14% in Spain (worst case), 2.5% in the UK, and 3x - 5x higher with 3D Secure than without. The context appears to be Visa recommending Risk Based Authentication (RBA) anti-fraud methods, rather than the EU legal requirement for Strong Customer Authentication (SCA) via one-time authentication methods. "Furthermore, Visa observed that independently of the SCA method used (SMS, Password, Bank credentials, etc.) when customer intervention is requested the abandonment rate is between three to five times higher than when authentication happens frictionless via RBA." https://www.eba.europa.eu/node/81948/submission/532 https://www.eba.europa.eu/node/81948/submission/532 EDIT: While I'd prefer to take Visa's own numbers, "Global Banking & Finance Review" published statistics in May 2021 claiming decrease in conversions of 25% - 50% across Europe after the introduction of the EU Payment Services Directive 2 requiring Strong Customer Authentication. https://www.globalbankingandfinance.com/the-real-impact-of-psd2/ https://www.globalbankingandfinance.com/the-real-impact-of-p...
- jhugo 4y agoI'm sure there was a spike before it was universal, but it would be interesting to know what it settled down to. If you abandon your cart because of 3D Secure in Europe nowadays you won't be buying much...