Identity management is a critical part of cybersecurity and business operations in every organization. However, in ecommerce specifically, given the sensitivity of transactions and the importance of user experience, confirming users’ identities is critical to the security and smooth operations across the entire ecommerce business.
Below, we’ll break down what authentication means for ecommerce, why it’s important, some of the best approaches to validating user identities, and considerations to get the most out of it.
Understanding authentication in ecommerce
Authentication in ecommerce refers to the process of confirming a customer's identity before granting them access to the shopping website or application, or to certain aspects of the application like ordering and checkout.
It’s important for ecommerce and online retail stores to confirm that the person attempting to make a purchase or access sensitive information is indeed who they claim to be. Authentication prevents unauthorized access and reduces the risk of fraud while protecting user data. It’s the first line of defense in securing online transactions and is also pivotal to helping organizations stay compliant with relevant data protection regulations.
That said, it’s imperative for ecommerce businesses to balance security with user experience, as overly complex login processes can lead to cart abandonment and lost sales.
Some of the emerging and most progressive authentication approaches in ecommerce include:
Biometric authentication: Uses the user’s unique biological traits, such as fingerprints or facial recognition, to validate their identity. This method has seen increased adoption in recent years for its security and ease of use.
Adaptive multi-factor authentication (MFA): Rather than standard MFA implementations – which can introduce friction for legitimate users – organizations are moving to implement risk-based MFA approaches that enforce MFA only for suspicious or anomalous login attempts.
Passwordless authentication: Improving the user experience and security by eliminating passwords altogether by adopting methods like social login, magic links, or biometrics.
Decentralized Identity: Utilizing blockchain technology to provide users with more control over their personal information by allowing them to share identity verification without exposing underlying data.
The importance of strong authentication in ecommerce
Authentication plays a crucial role in the ecommerce ecosystem for several reasons, impacting both the security and operability of online retail environments.
Authentication is the first step in any secure transaction. It ensures that the person initiating a purchase or action within an ecommerce platform is the legitimate owner of the account or payment method being used. This is critical in preventing fraudulent transactions, which can lead to significant financial losses and damage to the retailer's reputation.
Moreover, many regulations, such as the General Data Protection Regulation (GDPR) in Europe and the Payment Card Industry Data Security Standard (PCI DSS), require businesses to protect customer data and ensure the security of transactions. Failure to comply can lead to legal and financial penalties.
And while security is a primary concern, authentication also plays a vital role in the customer experience. Simple, yet secure authentication processes can significantly improve the ease with which customers access and use ecommerce platforms. Ultimately reducing friction in the shopping experience, leading to higher conversion rates, customer satisfaction, and loyalty. In fact, 89% of online shoppers are likely to buy from a competitor if they have a bad user experience.
Read more: 2023 FIDO Report Findings – People Prefer Passwordless
Best authentication methods in ecommerce
Having observed hundreds of CIAM implementations at Descope, here are the authentication methods we see most commonly used in ecommerce and online retail.
Magic links: These are unique, one-time-use links sent typically to the associated email. Clicking the link logs the user instantly, eliminating the need for a password.
Biometric authentication: Biometrics, particularly passkeys, offer a secure and user-friendly method of verification, as the traits are unique to each individual and are almost impossible to forge or intercept.
One-time passwords (OTPs): These are random sequences of characters generated for one-time use and sent via SMS or email. Since they are valid for only a short period, they are less susceptible to cyberattacks than passwords.
WhatsApp authentication: Authenticating via messaging platforms like WhatsApp can help businesses unlock omnichannel communications with end users, provide a native experience, and protect against security attacks targeting SMS authentication.
Other implementation considerations
Ultimately, the goal is to implement a secure, scalable, and user-friendly authentication system that aligns with your business objectives, regulatory requirements, and the evolving landscape of cybersecurity threats and consumer expectations. Which means you need a customer IAM platform that grows alongside them.
As far as the chosen authentication methods go, you need to consider their integration with your existing tech stack and whether they are compatible and scalable to support business growth and maintain performance during peak periods.
Here are some other aspects to consider for frictionless and secure customer identity management:
Step-up authentication: This approach requests an additional authentication factor from the user before performing a sensitive action (e.g. checking out high-value items in the shopping cart). Step-up auth can greatly reduce the impact of account takeover and provide a visible sense of security to end users at the right time in their journey.
Progressive profiling: Long registration forms and lots of upfront user collection can harm your site’s adoption and conversion. Ecommerce stores should consider progressive profiling – an approach that “gets users in” quickly with minimal information and collects more data during future visits when users are more willing to part with those details.
Guest account creation: Plenty of online retailers support guest account creation but without any form of authentication. Instead, consider offering simple authentication like magic links for guest checkouts. This validates the identity of the user, gives all parties involved a paper trail of the transaction, and enables the business to link the guest account to the full account if one is created later.
A/B testing: The success and continued growth of ecommerce companies is based on rapid adaptation and experimentation based on user needs. Businesses should ensure their CIAM implementation is adaptable as well – if changing the login screen or trying a new auth method will take months of work, the customer journey will suffer.
Simple & effective ecommerce authentication with Descope
In the ecommerce sector, where transactions and personal data intersect daily on a massive scale, implementing sophisticated authentication measures is not just advisable—it's imperative.
Recognizing the unique challenges faced by ecommerce businesses, our CIAM platform is designed to meet these demands effectively. It integrates cutting-edge authentication technologies, from biometrics and OTPs to magic links and WhatsApp auth, providing both robust security and optimal user convenience.
The best part? Our solutions aren’t just customer-friendly but developer-friendly too – our drag-and-drop workflows require little to no coding to set up and maintain. These workflows can also help you A / B test and experiment with your user journey – for example, you can send 20% of your login traffic to a different login screen with a new method, a changed layout, or any other experiment you can imagine.
Sign up for a Free Forever account with Descope and drag and drop your ecommerce customer journey flows. Have questions about our platform? Book time with our auth experts.
