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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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May 1, 2017


Additional Authentication: Is the Protection Worth the Hassle?

Last week, we discussed some findings from a research study conducted earlier this year to understand consumer knowledge of and attitudes regarding other authentication methodologies.

The survey participants read a brief description of alternative authentication methods and then answered a series of questions regarding their attitudes about the ease of use and willingness to adopt these alternatives. Some of the authentication methodologies reviewed were:

  • Fingerprint biometric
  • Device location
  • Eye vein biometric
  • Facial recognition
  • Device fingerprinting/identification
  • KBA (knowledge-based authentication, or personal data challenge questions)
  • Two-way text message
  • Voice-recognition biometric

The participants were asked to rate the ease of use for the alternative methodologies. The table shows the percentage of respondents rating the methodology as “very easy” or “somewhat easy.”

Chart-one

All age segments rated the user ID and password as the methodology having the greatest ease of use. All the groups ranked the eye vein biometric low in user ease; voice and facial recognition also scored low across the segments.

One key finding, which points out the continuing need for consumer education, was that many people did not understand the various alternative methodologies, even after reading a description and the pros and cons of each. Seniors were more likely to respond “Don’t Know”; millennials indicated a greater level of understanding.

Of particular interest, the study probed the ability of a financial incentive to entice customers to agree to adopt additional authentication tools. Just over half (51 percent) of the respondents indicated they would agree to additional authentication tools without any financial compensation. Offering a one-time $10 cash bonus would result in an additional 15 percent, and raising the ante to $25 would bring in 9 percent more. One-fourth of the respondents indicated they wouldn’t sign up for additional authentication with or without an incentive. Seniors are the least likely group (33 percent) to adopt additional authentication without an incentive, and millennials are the most likely (62 percent).

While the level of resistance by consumers to adopting stronger authentication processes seems to be dropping, there remains a strong need for customer education to demonstrate the benefits over any inconvenience. Meanwhile, a number of financial institutions and merchants are using covert authentication tools such as transaction-pattern anomalies and risk-based transaction scoring based on historical fraud experiences.

Passwords are likely to be around for quite some time as a basic means of authentification, but the payments industry and consumers must work together to provide a higher level of security for transactions. Do you think disincentives such as the service remaining free if you agreed to use additional authentication tools or being charged a monthly fee if you remain with a password as your only means of authentication are viable options? As always, your comments are welcome.

Photo of David Lott By David Lott, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed

 

May 1, 2017 in authentication , biometrics | Permalink

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