Eugene Mostert, Security Specialist employed at Transaction Junction for approximately 18 years, discusses the types of security protocols that exist to protect CNP transactions from fraud and how this is achieved.
Card-not-present (CNP) transactions have experienced significant growth over the years and, as a result, have attracted increased attention from fraudsters. However, significant improvements in security are helping make CNP transactions more secure. Here’s how:
1. Tokenisation
Tokenisation replaces sensitive card data with a unique, randomly generated token. This token has no value if intercepted and only works within the transaction’s context. Even if stolen, it cannot be reused, thus protecting card details from being compromised.
2. EMV 3-D Secure (3DS)
The latest version of 3-D Secure (3DS 2.0) is an authentication protocol that adds an extra verification layer to ensure that the person making the transaction is the legitimate cardholder. 3DS 2.0 improves on the original version by enabling a more frictionless experience, gathering over 100 data points to analyse risk without impacting customer experience. This helps to reduce fraud and minimises false declines.
3. Artificial Intelligence and Machine Learning
AI and ML models analyse patterns in transaction data to detect and flag suspicious activities in real-time. By learning from past transactions, these systems can better detect anomalous activities and differentiate between genuine and fraudulent transactions, helping reduce fraud in CNP transactions.
4. Dynamic CVV Codes
Some credit cards now feature a dynamic CVV code that changes periodically, rendering a previous code useless after a certain period. This is particularly helpful for CNP transactions, as it reduces the risk of fraudsters using stored card information.
5. Multi-Factor Authentication (MFA)
MFA requires multiple verification steps (such as a code sent to a mobile device or email) to authenticate the user. This is especially helpful for online transactions, as it ensures that even if card details are stolen, an additional layer of security is in place.
6. Improved Fraud Detection Tools for Merchants
Many online platforms are equipped with advanced fraud detection tools, which assess factors like transaction velocity (how quickly multiple purchases are made), geographical location, and other risk indicators to flag potentially fraudulent transactions before they go through.
These technologies are reducing fraud risks associated with CNP transactions, making online and remote transactions increasingly safer for consumers and merchants alike.
These advancements not only safeguard sensitive customer information but also build trust, ensuring a more secure and seamless experience for all stakeholders. As the payment ecosystem continues to evolve, ongoing collaboration and innovation will remain essential to staying ahead of emerging threats.