UK: Identity Checks Increase to Combat Fraud

March 23, 2022

Last week we talked about fraud and how certain developers launch new payment strategies without really making it safe for consumers in order to keep up with increasing demand in a competitive market.

The UK is attempting to fight fraud by increasing identity checks in the form of two-factor authentication for online shoppers. This is a huge change to card payments in the last 16 years, as more credit card payments are likely to get declined.

Last year alone the UK reportedly lost 376 million pounds to fraudsters. In hopes to increase safety when online shopping, customers will now be required to check their identity by providing a fingerprint, facial ID or a password, similar to online banking.

Not all purchases will fall under this rule, however, as low-cost items and subscriptions, for example, will not be requiring identity verification.

It’s also possible that consumers from now on have to answer an automatic phone call or have to sign into a banking app. Whether people will have more identity checks depends on the type of transaction. Low risk purchases, such as low-cost items or subscriptions, are exempt from the requirements.

Higher cost items or purchases that are not on par with the shopper’s spending habits or purchases made on devices that have not previously been used by the consumer will likely get flagged and therefore a security check will have to be performed.

According to Mastercard only one percent of the online purchases needed extra verification by the customer. The company expects that this percentage will increase to about 25 percent.

This will affect both consumers and retailers. In the run-up to the new rules, Barclaycard found that last February, more than 1.2 million online purchases worth more than 100 million pounds were declined.

Both consumers and retailers were effected by this. About 14 percent of consumers noticed an increase in their declined payments. To complete their purchase 37 percent headed to another retailer.

UK retailers are working in getting their systems ready to adhere to the new rules, according to the British Retail Consortium.

Fighting fraud is not an easy task. Unfortunately, as payments have changed and evolved in the last few years, consumers are looking for faster, simpler check-out systems. In previous blog posts, we have mentioned that more complex systems may lead to more false-declined purchases. In these cases, many shoppers will choose to go somewhere else.

Want to learn more? Check out EcommerceNews’ full write-up here.

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