Online payments with ID could be discounted

Online merchants could soon offer consumers discounts based on the level of confidence they have that shoppers are who they say they are, transactional steward Australian payments Network says.

In a note on managing fraud in the digital economy, the industry group - which counts banks, card schemes and payments services providers as its members - has flagged a premium on the level of confidence and ease of verification for online transactors.

“The next evolution may see a greater level of automated purchases through consumer devices based on a combination of artificial intelligence for purchasing and biometrics for authorisation (such as voice, face and thumbprint),” Lucy Anderson, Head of Payments Innovation at AusPayNet said on Monday.

“We may also see the introduction of merchant discounts that purposefully reward “known” customers, i.e. where merchants have more confidence about who they are selling to.

"So with a 10 [percent] discount, that drone I’ve had my eye on for a while now becomes that little bit more attainable.”

While the depth of the authentication discount in the razor-thin margin payments is unlikely to hit anywhere near double digit percentage points, what it does reveal is a push towards dynamic pricing of transactions based on customer risk scoring that rewards ‘known knowns’.

What’s less clear is where that will leave online customers who place a premium on anonymity and don’t want anything but the bare minimum their details captured by merchants.

Just who wears the liability for online payments fraud has progressively increased as a bone of contention between merchants, financial institutions, consumers and regulators as transactions increasingly default to a digital footing.

The Reserve Bank of Australia has increasingly started to agitate for greater adoption of PKI-based digital identity credentials as a way to reduce online fraud levels over the traditional use of credit and debit card numbers as a payment means.