If you have used any online transaction, you might be familiar with payment authentication. But some of you might not know what does it mean to authenticate your payment yet. No worries.
Because we have written this post to talk about all the ins and outs of payment authentication systems, if any of your online payments got denied because of payment authentication or you want to learn more about this topic, this post is for you.
So, let’s get started…
What Is a Payment Authentication System?
The system of confirming a customer/payer’s identity using various authentication factors/tools when a payment is processing is known as a payment authentication system.
Usually, while you are using your credit or debit card or mobile banking app to pay for something online, you would have to face the authentication system.
There are many kinds of authentication protocols out there. Depending on your card’s issuer, your bank, or the websites where you are using the card, the authentication system will vary.
What Does It Mean To Authenticate Your Payment?
Now you know the definition of a payment authentication system. But what does it mean if you are informed about authenticating your payment? This means that you will have to pass the authentication system set by the recipient of the payment.
Or it could also mean that your bank or card issuer has set up an authentication system in place that you will have to pass every time you want to pay.
After you have successfully passed the authentication process, your payment will be accepted or denied. Otherwise, you will not be able to make any payment with the said method.
What is the use of the Payment Authentication System?
Normally, having to authenticate your payment every time you pay is a hassle. Then why does the system exist in the first place? Interestingly, even though this is annoying, this system is in place only because of your safety.
With the authentication system’s help, the recipient and your card issuer/bank can confirm that you (the original owner) are using the payment method. That way, any other persons will not be able to use your cards or bank accounts. In short, it keeps your money safe from fraudulent peoples.
How Many Types of Payment Authentication Systems Are There?
Day by day, new payment authentication systems are being added to the industry. Also, some systems are getting outdated as well. Let’s talk about some of the most popular ones at this moment.
You might already be familiar with this authentication system. Typically banks use this system to authentication payment if you are using their mobile banking apps. This is a system you have to set up with your phone number.
So, when you need to make a payment, the 2FA system will be triggered. Then, you will receive a code or OTP (One-Time Password) to your phone number. You will have to enter the code you have received via text message in the app to complete the payment or transaction.
3DS2/3D Secure 2
This is another authentication protocol active nowadays. However, this is usually used when you are paying using your credit card. This system was designed and implemented by various top credit card networks.
As the name suggests, this system is there to protect international transactions. If you are paying online, then you don’t have to use a physical card. Actually, you only need the card number, expiry date, name of the owner, and CVC code. So, even if the hacker doesn’t have your physical card but could acquire these numbers somehow, they will be able to use your card.
As a matter of fact, they can use it even if they are residing in a different country than where your card is issued. The Geolocation authentication system is in place for combating transactions made from other countries than the country where the card is issued.
So, if the hacker is in another country trying to use your card, their transaction attempt will be declined. However, unfortunately, they can use VPN to bypass this authentication system. Still, it protects thousands of cardholders worldwide every day.
AVS/Address Verification System
This is a very newly launched authentication system. As a result, it is not yet available worldwide. You will find it in the USA, UK, and Canada. Typically, this system works by comparing the billing address that the payer submitted against the cardholder’s billing address provided by the card-issuing bank. Typically, it will be set up by the banks and credit card processors.
Final Linas on the Question – What Does It Mean To Authenticate Your Payment
We have to admit that a payment authentication system is vital for the e-commerce industry. It might not be enjoyable to authenticate your payment every time you purchase or pay bills. However, without this, your payment method would not be secure.
As a matter of fact, if you haven’t enabled a payment authentication system, or if the website where you are paying doesn’t have this system, bad peoples might even use your credit/debit cards without you even knowing. So, it is crucial to set up various payment authentication systems for card users and e-commerce sites.
We hope we shed some light on the payment authentication system. If you have found this post useful, you can share it with others. And, if you any questions or suggestions, you can let us know in the comments below! Also, check out the list of 10 Best Mobile Payment Apps in 2020!