Europe as a model for US payment security

July 5, 2019

Europe as a model for US payment security

By Ralf Gladis, founding director, Computop

By law payments are getting more complicated — at least in Europe. All EU countries decided to require more security for consumer payments. And increased security will take its toll on the customer's user experience. That doesn't sound like a good example for the U.S., but, according to many experts, it actually is. And here is why:

I recently saw a presentation from Visa explaining that it will only take five years for credit card acceptance to move from 44 million merchants to buy from to 440 million places to buy from because by then many devices and machines around us — the Internet of Things — will be transactional. As digitalization moves fast EU regulators try to ensure an appropriate level of security in payments. That wouldn't be bad for U.S. consumers either, would it?

Beginning on September 14th every payment within European borders needs to be authenticated twice. In order to do so two out of three security measures apply: something we know, like a password; something we have, like a smartphone; and the third option is biometric authentication, like a fingerprint, face or voice recognition. A password can be combined with a fingerprint. Or, if you want to buy music while driving on the highway, the car is something you have, and together with your voice it makes two factors to authenticate your in-car purchase.

If that sounds new to you, it actually isn't. That's how Apple Pay has worked for many years now. The phone or tablet is something you have. And fingerprint or faceID are a second security factor when using Apple Pay. Although Apple Pay is an example for two-factor authentication there is no doubt that it is as comfortable as payments can be. So, maybe there is still hope for Europe despite the introduction of two-factor authentication.

The main reason why Apple Pay is so comfortable is the biometric authentication. For consumers it feels like looking in the camera or putting a finger on a sensor are good enough to process a payment. Biometric authentication provides both more security and more convenience compared to good old passwords. Due to regulation, increased security and more convenience biometric authentication will see fast adoption by millions of consumers.

Given that trend, it seems very odd that J.C. Penney Co. and Zalando SE would remove Apple Pay from their online shops. Their reasoning includes Apple Pay's lack of delivery options, gift and loyalty cards. However, critics suspect that these merchants just want to collect more data which Apple Pay isn't willing to provide. Another reason could be that Apple Pay users get such a comfortable user experience that they don't need to register with the merchant anymore.

Apple Pay is a good example of two factor authentication that is secure and comfortable. Privacy and security are important to all of us whether in Europe or in the U.S. Wouldn't it be a good idea to protect U.S. consumers, too, in order to increase trust in a fast-growing digital world where we'll very soon have 440 million places to buy from?

Cover photo: iStock

Topics: Mobile Payments, Retail, Security, Trends / Statistics

Companies: Computop, Apple

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