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Payments are being redefined by technological innovation and are reshaping the way businesses and consumers transact. The evolution of digital payments is not just about speed and convenience, it is as much about redefining financial interactions to achieve several key objectives:

◾Reinventing the customer experience

◾Promoting financial inclusion

◾Strengthening security and mitigating fraud exposure

◾Leveraging data for strategic product and service offerings

◾ Unlocking new global opportunities

etc

There are different verification methods that exist to authorise a transaction, each serving as a security layer to confirm the legitimacy of a payment. These are known as Cardholder Verification Methods (CVMs), and they play a crucial role in determining how a transaction is authenticated before being approved. The type of CVM applied to a transaction depends on several key factors, including:

◾The type of card being used – Whether the payment is made via a debit card, credit card, prepaid card, or a digital wallet can influence the applicable CVM.

◾The payment method – Transactions can be processed through contactless payments (e.g. mobile wallets, NFC-enabled cards), chip & PIN terminals, online checkouts, or manual card entry. The CVM requirements will vary based on the medium of payment.

◾The acquirer and issuer policies – Specific rules regarding CVM enforcement may differ between acquirers and issuers , especially for high-value transactions or cross-border payments.

◾The transaction amount – For contactless payments, lower-value transactions may not require CVM, while higher-value purchases may prompt additional verification.

◾The risk level of the transaction – Transactions flagged as high-risk (e.g. unusual spending patterns, cross-border transactions, or purchases from high-fraud industries) may require stronger verification methods.

The common types of Cardholder Verification Methods (CVMs) include:

1️⃣ PIN (Personal Identification Number), depending on the setup, the PIN can be validated offline (by the card terminal) or online (through the issuer’s system).

2️⃣ Signature Verification although less common today, especially in markets where chip and PIN or contactless payments have taken over.

3️⃣ No CVM Required with some transactions, particularly low-value contactless payments. If a contactless card is used repeatedly without a CVM, some issuers may enforce additional security measures, such as requiring a PIN for the next transaction.

4️⃣ Consumer Device Cardholder Verification Method (CDCVM), with the authentication performed directly on the consumer’s own device instead of at the payment terminal, using biometric authentication (fingerprint, facial recognition, iris scan), passcodes, or patterns on a smartphone, smartwatch, or tablet.

👉🏽#Paymentexperts, any perspectives to add on #cdcvm #authorisation verification methods?

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