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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 4, 2015


Keeping Up with the Criminals: Improving Customer Authentication

The interesting thing about authenticating customers for checks and PIN-based debit transactions is that the customer's authentication credentials are within the transaction media themselves—a signature, a PIN. But for the rest of the transaction types, authentication is more difficult. The payments industry has responded to this challenge in a few different ways, and may be turning increasingly to the use of biometrics—that is, the use of physical and behavioral characteristics to validate a person's identity.

Improving customer authentication in the payments industry has been a focal point for the Retail Payments Risk Forum since its formation. After all, authenticating the parties in a payment transaction efficiently and with a high level of confidence is critical to the ongoing safety and soundness of the U.S. payments system. We have intensified our focus over the last two years, including holding a forum on the topic in mid-2013. The Forum has also just released a working paper that explores the challenges and potential solutions of customer authentication.

The working paper examines the evolution of customer authentication methods from the early days of identifying someone visually to the present environment of using biometrics. The paper reviews each method regarding its process, advantages and disadvantages, and applicability to the payments environment.

Much of the paper looks at biometrics, an authentication method that has received increased attention over the last year—partly because smartphones keep getting smarter as folks keep adding new applications, and as manufacturers keep improving microphones, cameras, accelerometers, touch sensors, and more.

The table lays out six key characteristics that we can use to evaluate a biometric system for a particular application.

New_characteristics_table

The use of biometrics will be the subject of an upcoming forum hosted by the Retail Payments Research Forum later this fall, so stay tuned as we finalize the date and agenda. In the meantime, if you have any comments or questions about the working paper, please let us know.

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

May 4, 2015 in authentication , biometrics , emerging payments , innovation , mobile banking , mobile payments , risk management | Permalink

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