# Convenience vs Security in Ecommerce Payments: How everyone can win
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-09-14
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Enhance Ecommerce Payments Security
Meta Description: Learn how banks and retailers can enhance online payment security while ensuring a seamless shopping experience with dynamic risk-based authentication.
URL: https://financedigest.com/convenience-vs-security-in-ecommerce-payments-how-everyone-can-winhtml

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**_Rune Sørensen explores how banks and merchants can increase security and enable a frictionless ecommerce payments experience for customers_**

> In 2018, banks and retailers are dealing with a new breed of customer: one that expects a fast, seamless online payment experience.

When it comes to ecommerce, however, user experience isn’t the only consideration. As the number of card-not-present (CNP) purchases continue to increase, so do the security risks.

How can banks and merchants continue to offer customers security and transparency in payments without impacting their overall [online shopping](https://www.financedigest.com/increasing-trend-of-online-shopping-to-create-new-growth-opportunities-for-stretch-sleeve-and-heat-shrink-labels-market-says-tmr.html "Increasing Trend of Online Shopping to Create New Growth Opportunities for Stretch Sleeve and Heat Shrink Labels Market, Says TMR") experience? How can this be done while fulfilling the [Strong Customer Authentication](https://www.financedigest.com/strong-customer-authentication-must-be-adopted-to-make-open-banking-a-success.html "Strong Customer Authentication must be adopted to make open banking a Success") (SCA) requirements mandated by the second Payment Services Directive (PSD2), and making use of the exemptions to offer frictionless authentication?

Readers will already be familiar with 3-D Secure, the XML-based protocol that adds an extra layer of [security to online CNP transactions and enables consumers to authenticate](https://www.financedigest.com/behavioral-biometrics-simple-and-secure-way-to-authenticate-consumers-digital-identities.html "Behavioral Biometrics: Simple and Secure way to Authenticate Consumers’ Digital Identities") themselves. The facility helps prevent unauthorised transactions and protects [merchants from CNP fraud](https://www.financedigest.com/merchants-are-the-first-line-of-defence-against-fraud-heres-how-we-can-help-them.html "Merchants are the first line of defence against fraud: here’s how we can help them"). Unfortunately, however, it also detracts from the customer’s [payment experience](https://www.financedigest.com/how-netflix-justeat-and-uber-raised-the-bar-for-the-payments-experience.html "How Netflix, JustEat and Uber raised the bar for the payments experience") by increasing the number of steps needed to complete the process.

The addition of [risk-based authentication (RBA)](https://www.nets.eu/perspectives/Pages/Convenience-vs-Security-in-Ecommerce-Payments.aspx) provides a countermeasure. In many ways, it’s a magic ingredient: an elusive technology that further protects [consumers online](https://www.financedigest.com/from-in-store-to-online-how-the-pandemic-affected-consumer-behaviour.html "From in Store to Online: How the Pandemic affected Consumer Behaviour") while simplifying the payment experience at the same time.

RBA is a dynamic, parameter-driven system that measures the risk level of a transaction and uses it to determine how strong the [security challenge](https://www.financedigest.com/hybrid-working-and-the-continued-security-challenges-for-financial-organisations.html "Hybrid working and the continued security challenges for financial organisations") should be. Parameters include transaction amount, number of transactions within a specified time-frame, the cardholder’s browser fingerprint, and the country the payment originates in. Issuers can decide their individual risk profile and let transactions that they deem safe be authorised without further authentication. This means that with RBA, the customer is only required to enter their 3-D Secure password for higher-risk transactions, instead of every time they initiate a [payment online](https://www.financedigest.com/online-payment-gateway-market-to-witness-a-cagr-of-10-3.html "Online Payment Gateway Market to witness a CAGR of 10.3%").

If, for example, a [consumer initiated a €10 transaction from a device they had frequently authorised payments](https://www.financedigest.com/unfolding-the-great-payments-disruption-how-consumers-can-navigate-this-new-financial-world-and-how-financial-institutions-can-rise-to-the-challenge.html "Unfolding the Great Payments Disruption – how consumers can navigate this new financial world and how financial institutions can rise to the challenge") with in the past, such as their own laptop, in the country where that card is registered, this could be classified as a low risk transaction, so additional password entry is not required. The payment experience is [improved via a smoother and faster process](https://www.financedigest.com/keep-your-head-in-the-cloud-improving-the-order-to-cash-process.html "Keep your head in the cloud: improving the order-to-cash process") for the consumer and, crucially, security has not been compromised.

RBA also [benefits merchants and banks](https://www.financedigest.com/online-banking-benefits-and-risks-of-managing-your-finances-online.html "Online banking: benefits and risks of managing your finances online"). For both parties, it reduces their liability for unauthorised CNP transactions, minimising any pay-out in the event of fraud. In addition, it has been found to reduce occurrences of ‘non-completed’ transactions, which [boosts revenues](https://www.financedigest.com/optical-satellite-communication-market-emerging-trends-to-boost-the-global-revenue-growth-discussed-in-a-new-market-research-report-by-tmr.html "Optical Satellite Communication Market – Emerging Trends to Boost the Global Revenue Growth Discussed in a New Market Research Report by TMR").

In a Nets 3-D Secure with RBA pilot, at [major Nordic bank](https://www.financedigest.com/banks-oil-majors-lift-british-shares-higher.html "Banks, oil majors lift British shares higher"), DNB, the share of non-completed transactions decreased significantly when risk-based authentication was used. For one merchant involved in the trial, not completed transactions decreased by 13.8%.

As consumers demand ever more frictionless payment methods when shopping online, RBA will quickly become a necessity. Dynamic, parameter-driven [systems will give issuers the power](https://www.financedigest.com/telecom-tower-power-system-market-is-expected-to-reach-us6-7-bn-by-2031.html "Telecom Tower Power System Market is expected to reach US.7 Bn by 2031.") to determine the risk levels they are comfortable with, while consumers experience fast, seamless payments and merchants and banks increase their revenues. Everybody wins – other than fraudsters, of course.

Find out more about RBA and read the full DNB case study in our latest eBook: [Risk-Based Authentication: the next generation of 3-D Secure explained.](https://www.nets.eu/solutions/card-processing/Pages/insights.aspx)


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