The Cornerstone for eCommerce's Future - Digital Identity

May 20, 2024

Digital identity is all about your unique traits, not just your card number or behaviors predicted by AI.

Over the years, technological advancements have drastically reshaped commerce. Today, it's common for shoppers and merchants to be continents apart, and more money moves around digitally than in physical stores.

As commerce has transitioned from purely offline to predominantly online for low-to-average-cost consumer goods, verification methods have continuously advanced, becoming more personalized. Verification here refers to confirming the legitimacy of transactions ensuring security and authenticity in digital payments.

From Cards to User Behaviors

Card numbers have historically acted as proxy identifiers for individuals within the payments ecosystem. However, they do not directly confirm your identity; instead, they merely demonstrate that someone possesses a specific string of numbers associated with an account and card. This limitation has led to increasing instances of payment fraud, as fraudsters can use stolen card numbers to make unauthorized transactions.

As a result, experts have developed sophisticated detection systems leveraging robust data collection. By utilizing extensive data and advanced behavioral analysis through Artificial Intelligence (AI) and Machine Learning (ML), fraud detection aims to identify genuine cardholders. For instance, if your payment behavior consistently aligns with certain activities or geographic regions, a modern fraud detection system will flag transactions that deviate significantly from end-user patterns as suspicious, such as transactions occurring in distant or reputably risky locations.

Traditionally, data collection was coupled with a static rule engine called Risk-Based Authentication (RBA). RBA assesses transactions against predetermined criteria. However, fraud constantly evolves, presenting new challenges beyond what static rules can anticipate. Recognizing this, the integration of AI and ML marks a pivotal advancement. By supplementing traditional credentials with behavioral patterns, fraud detection tools gain a dynamic understanding of buyer identity, surpassing the limitations of relying solely on numerical data.

The Spontaneity of Humans

Human purchasing behavior can be unpredictable, similar to the random walk theory. When it comes to shopping, we often act spontaneously, indecisively, or impulsively, defying past purchasing patterns. For example, consider the case of Shaquille O'Neal, a basketball legend, who made a $70,000 purchase at Walmart at 3 a.m.

Despite his over $20 million annual salary, American Express declined Shaq's card. They flagged the transaction as suspicious until he verified it by a phone call. This outlier event highlights the limitations of fraud detection at that time; it helps issuing banks to understand the bigger picture, but not 100%.

However, relying solely on a phone call verification for every transaction is inconvenient. Instead, passwordless authentication provides a robust solution by leveraging unique traits like your face, fingerprint, and biometrics.

Your Business is The Cornerstone of Digital Commerce's Future

Today, digital identity is about identifying what makes the user uniquely themselves throughout their commerce experiences. To further enhance your user's online payment experience, we introduce Veri-FIDO, a new approach to digital payment identity that offers a smoother and more secure online shopping experience.

Veri-FIDO binds user account credentials with your device, allowing for faster and safer authentication. To get started, users simply enroll once during checkout or through a mobile banking app, then pay with a single gesture on any device or platform. Passcodes and third party authenticator applications are no longer needed for each transaction.

Behind the scenes, HiTRUST provides our Fast Identity Online (FIDO) server, enabling cardholders to authenticate and verify their identities. Issuers can simply implement this anywhere authentication is needed, specifically for login, online banking transactions, and 3-D Secure transactions.

Join us in shaping the future of commerce payments, where you are the star. Discover the ease and security of Veri-FIDO today!