Delegated authentication is attractive because it provides a payment authentication option without sacrificing consumer experience or security. Issuers may entrust authentication to a third party. Consequently, it may be an acquirer, a digital wallet provider, or you as the merchant. An additional layer of electronic payment protection is advantageous for combating fraud. However, the additional stages generate friction.
During a regular purchasing journey, a consumer is subjected to two authentications. First, with the merchant when they check in, and then with the issuer when it is time to pay. The less likely are customers to complete a transaction, the more hoops they must jump through to make a buy. In certain circumstances, clients are unable to determine if the issuer pop-up window is genuine, which might lead to skepticism and transaction abandonment. Therefore, it is essential to simplify this procedure from a revenue standpoint.
The issuer interface is no longer routed to the customer with delegated authentication. This implies that you may authenticate clients on your own and retain them inside your domain to facilitate “one-click” purchases. Cardholders are often transferred to the issuer portal at checkout, as previously stated. This indicates that you do not influence the user experience or authentication mechanism when a consumer visits your website to purchase a product or service. If you are a bigger firm that collaborates with many PSPs, your clients’ purchasing experience may vary significantly. Some clients may be subjected to much greater friction or have fewer authentication alternatives available, increasing the number of obstacles to completing a purchase. In addition, this lack of consistency will not help dispel client suspicions.
Delegated authentication gives you control over the payment authentication process. You may satisfy the SCA standards by choosing when and how to verify your consumers and with the help of fido2 passwordless authentication. As an online merchant, you are already familiar with your customers, what they want, and the most seamless method for authenticating their payments. So it seems reasonable that you are the one to supply this.
To know more, below is an infographic from Login ID entitled “How Delegated Authentication and Payment Authentication work with PSD2.”
