When your business is enabling authenticated payments and its birthdate begins with the numbers ‘1’ and ‘9’, you know a few things about meeting customer needs in an ever-changing marketplace CardinalCommerce co-founder and CEO Tim Sherwin said.
CardinalCommerce offers flexible authentication methods based on a configurable rules engine situated in its Centinel Platform. It allows the customer to select which transactions to authenticate based on a filter set that controls fraud and maximizes sales.
Since CardinalCommerce was founded in 1999 the industry has seen several significant shifts that have impacted the relationship between customers, merchants and payment processors, Mr. Sherwin said. One is the challenge of providing a positive identification of a cardholder online.
Old payment systems were impacted as merchants had to conduct transactions without a customer signature, he explained. When a purchase was disputed the merchant was always liable.
CardinalCommerce has a solution for that, Mr. Sherwin said. Its 3-D Secure allows for real time authentication of a cardholder before the transaction is authorized. Version 2.0 is an updated protocol set that authenticates CNP transactions to eliminate fraud and false positives with frictionless checkout. It enables merchants and card issuers to use what each knows about the consumer, along with hundreds of data points, to make informed risk decisions.
That’s a clear improvement over earlier industry efforts where a merchant would electronically redirect the cardholder to banks for authentication or force the customer to enroll in a program and create a profile in the checkout line.
“That stopped fraud and protected the merchant, but they were reluctant to deploy it because the friction resulted in lost sales,” Mr. Sherwin said.
A better solution allows parties to select their preferred authentication methods, he explained. Redirection can seamlessly occur during the transaction, with risk models gathering information including IP addresses to make an informed decision. Some merchants choose an authentication method based on how much they are comfortable with impacting the user experience. Others lean more heavily on data modeling.
CardinalCommerce is also approaching the first anniversary of its purchase by Visa, Mr. Sherwin said. Announced in December 2016 and completed in February 2017, the move is a great one for CardinalCommerce for many reasons. A legion of Visa salespeople now tout CardinalCommerce solutions to their existing customer base.
The two companies are actively working on tokenization concepts.
“The key is how to replace systems without the consumer having to do something,” Mr. Sherwin explained.
CardinalCommerce and Visa are also focusing on the best ways to leverage the large volumes of data companies now have to improve the digital commerce experience, Mr. Sherwin said. In 2016 roughly nine per cent of sales were completed online, a percentage that is expected to grow to 20 per cent by 2020. Visa’s share of retail spend is 15 per cent, a figure that nearly triples to 43 per cent online.
Yet both decline and fraud rates are growing faster than spending, problems that must be quickly addressed, Mr. Sherwin said.
When shoppers aren’t physically in front of a merchant, issuers often have no idea if the person making the transaction is the same as the name on the card. Older infrastructure cannot support the new data methods, so new solutions are needed. 3-D Secure 2.0 tackles those issues by making transactions more frictionless without interrupting CX, Mr. Sherwin said. It incorporates more data without relying on the consumer’s browser to authenticate more than 95 per cent of transactions behind the scenes.
CardinalCommerce and Visa are also working on IoT solutions, Mr. Sherwin said.
“It took Visa 50 years to get to three billion cards issued. By 2021 there will be more than 30 billion connected devices.”
Mr. Sherwin said he has seen industry focus shift a few times over the 18 years he has been with CardinalCommerce. Early on there was a game between merchants and issuers looking to shift liability for fraud and chargebacks. As digital commerce became more prominent the focus shifted to approvals.
With the advent of the EMV chip, fraud migrated online and the impact of being deemed responsible for the declined transaction of a good customer began to be felt. Half the time the customer blamed the retailer. When declined at Retailer A, they went to Retailer B who may have used different protocols. If approved by Retailer B they often moved their business to them. If Card A was declined at a retailer but Card B was approved, Card A was less likely to be used.
“User experience is now more of a collaboration of the ecosystem,” Mr. Sherwin said.