43% of eCommerce Execs Say Two-Factor Authentication Can Mitigate Fraud
It’s imperative for eCommerce merchants serving international markets to be able to complete frictionless cross-border transactions. However, since these merchants must also fend off fraudsters, they must find and employ fraud prevention tools that do not disrupt consumer transactions. When compiling “Fraud Management in Online Transactions,” a collaboration with Nuvei, PYMNTS Intelligence found that 82% of […]
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It’s imperative for eCommerce merchants serving international markets to be able to complete frictionless cross-border transactions. However, since these merchants must also fend off fraudsters, they must find and employ fraud prevention tools that do not disrupt consumer transactions.
When compiling “Fraud Management in Online Transactions,” a collaboration with Nuvei, PYMNTS Intelligence found that 82% of U.S. eCommerce merchants with international sales suffered cyber or data breaches last year, which — for 47% of them — resulted in both lost customers and revenue. In fact, 68% of eCommerce merchants told us that balancing security needs with the need to keep customers satisfied has proven to be a challenge.
Consequently, 95% of the merchants we surveyed told us they have either already enhanced the their anti-fraud capabilities or they are planning to do so soon.
In completing “Fraud Management in Online Transactions,” we examined 10 widely-used popular fraud prevention tools and found that two-factor authentication (2FA) — in which shoppers must authenticate each checkout, often with a code sent to their phones — is not only the most effective anti-fraud method but also the one that delivers the lowest rates of failed payments.
Not all 2FA technologies are the same, however. The tool comes in two flavors: per-transaction 2FA and at-login 2FA, with the former appearing to be far more effective.
Among those using per-transaction 2FA, 43% say it’s their most effective security method.
Per-transaction 2FA is not only effective in fighting fraud prevention, it’s also the most effective measure for minimizing failed transactions. Merchants implementing 2FA for each transaction reported a failed payments rate of just 10.3% — the lowest among the 10 security methods we measured. As the chart illustrates, even highly effective transaction confirmation notifications have a slightly higher failed payments rate of 10.8%.
However, only 22% of merchants using at-login 2FA say it’s their most effective method, suggesting there is a greater efficacy in per-transaction 2FA, especially since it enables users to remain signed in across multiple sessions.
Despite its popularity and effectiveness, only 53% of merchants now use per-transaction 2FA. Although it is the third-most common security method, nearly half of eCommerce businesses are not yet benefiting from it. Merchants seeking a more secure way to do business should follow the data, which indicates that per-transaction 2FA has proven itself to be both a valuable tool in reducing fraud and an effective way to boost customer satisfaction.
The post 43% of eCommerce Execs Say Two-Factor Authentication Can Mitigate Fraud appeared first on PYMNTS.com.