Delegated authentication protects data from E-commerce fraud prevention by requiring only those with the appropriate credentials to access it. This prevents attackers from accessing sensitive information on a compromised server. However, this type of authentication is not recommended for all environments.

Delegated Authentication works with Payment Services Directive or PSD2, a new payment security law aims to make payment transactions safer and more secure for consumers. One of its most significant requirements is strong customer authentication, but adding extra security measures can impact the checkout experience. With delegated authentication, a single gesture can demonstrate two factors of authentication. That means a lower risk of payment fraud for merchants and a higher conversion rate for shoppers. In order to meet PSD2 compliance requirements, merchants should ensure that their delegated authentication provider is a trusted partner.

A delegated authentication broker program is an option available for merchants through Mastercard, Visa, and GIE Cartes Bancaires. It enables merchants to implement delegated authentication through a common interface. However, each scheme has its registration requirements. Nonetheless, merchants implementing delegated authentication may benefit from lower cart abandonment rates, improved control, and transaction approval rates. These benefits are clear to merchants.

When used correctly, delegated authentication allows merchants to offer secure and fast payment experiences. Authentication requires agreements between merchants and card issuers, which can be laborious. To make things easier, most major card networks have brokerage programs that facilitate the integration between merchants and payment processors. This allows merchants to benefit from the same security measures that banks use. The added security will also protect the merchants in the future. Aside from Delegated Authentication, there are other few security systems that work with PSD2 like payment authentication and more against real time fraud prevention.

If you want to learn more about how delegated authentication and payment authentication work with PSD2, you can read this infographic from LoginID.