“In the world of payments,” Schalk Nolte, CEO of Entersekt, said to PYMNTS, authentications for internet-based commerce and mobile banking “have not been connected at all.”
A consumer can, with that fragmentation, have a multiyear relationship with a bank, but when it comes time to complete an eCommerce transaction, “They don’t know who you are.
“There are completely different authentication mechanisms in place.”
A device used in one channel is not recognized as part of a customer journey continued in another channel. As a result, there are negative impacts to authorization rates and the success of 3DS, the technical standard that helps secure online card transactions.
Data, unified and placed in context — granular, device level data — can help financial institutions (FIs) battle the rising tide of fraud (such as through synthetic IDs) while boosting authorization rates, making commerce both seamless and safer.
To that end, Entersekt said Tuesday (Dec. 11) that it acquired the Modirum 3-D Secure software business. Modirum’s offerings, the companies said, authenticate digital payment transactions globally in numerous payment systems, spanning hundreds of issuers and thousands of merchants, while enabling 3DS transactions for hundreds of millions of cardholders.
Nolte told PYMNTS that the deal gives Entersekt an immediate boost to scale, securing more than 2.5 billion transactions annually, expanding global reach, adding presence on the merchant side and a directory service. As the deal closes, he said, Entersekt will take its place among the top five global 3DS vendors, and has ambitions in place for No. 1 or 2 in the space within the next few years.
In terms of the mechanics, Modirum’s 3DS solutions are being added to the Entersekt Secure Platform for transaction authentication.
The combination of the two firms’ authentication and 3DS products, he said, will help break down fragmentation and silos, and over time reduce the reliance on passwords, including one-time passwords (OTPs) — and affording FIs more armor in the battle against bad actors.
“If you combine all the arrows in the quiver that we have,” he said, “we can defeat the schemes that are out there and ensure that we remain future proof as well.”
Asked by PYMNTS to offer up a hypothetical example of how commerce is improved, he said an individual traveling to a country they’ve never been to before could log in on their mobile device to complete a transaction — and, as might be seen traditionally, might see a transaction declined because the transaction’s coming from a new location.
The unified efforts of Entersekt and Modirum’s products, he said, can essentially note that a device has been “seen” in the past during traditional banking activities and authenticated, so the transaction can be greenlit and completed. Authorization rates can be improved by as much as 20%, Nolte said.
“We want to use these data sets,” he said, adding that if the context can be provided so that a verified consumer is wielding a device already recognized across what he termed “the user journey” with a history of good transactions, “why should we bother you with an OTP? That’s the point we want to get to — using accurate data to make better risk decisions when its evident that it’s the same person accessing a service” whether they are using card, faster payments or Zelle.
“Ultimately this is about combining a contextually aware authentication stack with best of breed 3D Secure,” he said of the acquisition.