Federated identity management is the technical term behind what we commonly call “single sign-on” or SSO, where one set of web credentials unlocks multiple ecosystems and platforms.
PYMNTS’ May 2021 Authenticated Payments Report, done in collaboration with LoginID, goes deep on this timely topic, as the mass online migration of legitimate consumers is being tailed by a shadow force of fraudsters, who are stealing passwords and still reveling in COVID-era chaos.
“Federated identity systems could be the key to reducing reliance on passwords as well as lessening customer friction and improving the security of authenticated payments,” according to the new Authenticated Payments Report. “These systems allow users to enter a single username and password that then provides access to all services linked to it, curtailing the number of passwords one needs to remember and the risk of compromised accounts after a data breach. One common type of federated identity solution is known as single sign-on (SSO), which studies have shown can reduce lost or stolen password rates by up to 90 percent.”
Given that roughly 65 percent of consumers abandon websites if asked to create a username and password — and 92 percent bail without even trying to recover/reset forgotten usernames or passwords — SSO is a beacon of hope for an imagined passwordless world.
Biometrics Bypass PINs And Passwords As SSO Beckons
Security is the watchword with SSO, but convenience and ease of use are selling the idea.
The new Authenticated Payments Report quotes Clay McDaniel, CEO of social media marketing firm Ripl, which uses the SSO of Facebook, Google and Apple. McDaniel told PYMNTS that “trusted reliance on recognizable widespread authentication options like [those of] Facebook, Google and Apple has pushed our initial registration rate from 95 percent to north of 99 percent. We have hardly anybody now stepping away from the initial … sign-up and registration experience,” which he chalks up to “presenting recognized and trustworthy options.”
McDaniel added that “with Android in particular, we lopped off about 20 percent of registration time” using SSO. “We’ve [also] shaved almost 25 percent of the time to get people through the [web] registration sign-up process by offering Google, and on iOS [we] have similarly seen a significant reduction in the amount of time required for sign-up.”
It’s also a positive sign that consumers themselves see the wisdom of moving on from static credentials. Noting that “consumers are growing cognizant of passwords’ inherent weaknesses,” the report states that people are now looking for “secure and convenient alternatives when it comes to applications like payments authentication. A recent survey found that, for the first time in four years, consumers did not include passwords in their top three rankings of most secure authentication methods, instead listing physical biometrics, PIN codes and behavioral analytics. This shift coincides with a massive change in financial lifestyle due to the pandemic.”
Securing Everything, All The Time
Credit card fraud took close to $30 billion last year, underscoring the fact that Fraud, Inc. is a big, bad business, and it’s taking considerable efforts to slow its post-COVID roll. Here again, it’s where federated identity systems come into the picture, and where credentials depart.
“Built on a strong KYC process, federated identity solutions will allow subsequent merchants and clients to rely on the initial, strong KYC; therefore, for the subsequent company, the labor-intensive manual checks are eliminated, and for customers, it is a one-time effort,” Simon Law CEO of LoginID told PYMNTS.
“Once customers go through the KYC process, they will [have] the ability to gain access to all the linked merchant sites, entities and websites. As long as the initial KYC is strong, the information can be relied on across multiple industries, from health to commerce to government websites,” Law said.