The banking industry and online merchants are fighting against fraud by developing fraud detection systems that are increasingly subtle and complex.

Because of our online habits and the number of transactions that are done through the internet, they created the concept of digital identity in order to reinforce the level of online protection. In other words, fraud detection systems created digital fingerprints of real users to better recognize fraudsters. The process is a combination of various elements which help to determine your identity. For instance, before validating an online transaction, they do not just check the number, the validity date and the cryptogram of the credit card. They will also comb through the user’s identity and behavior, using statistical analysis and artificial intelligence. Where does it connect? What time is the purchase? Which browser does he use? In which shop, does he shop? What is his order history? What are the technical specificities of his screen and his computer? Etc. If something does not fit, the transaction is rejected or a manual check is triggered (a call, for example).

On March 14, the banks had to have made available a test API portal dedicated to developers.

Cybercriminals naturally reacted to this manoeuvre. To remain under the radar of detection systems, the fraudster has a fake digital identity that is as close as possible to the owner of the credit card: an IP address of the same country or city, the same browser version, the same screen, the same way of navigating, etc. The ideal is obviously to have the identity of a real person. These identities can be purchased on the Darknet. According to Kaspersky’s security researchers, the largest marketplace of its kind is called Genesis, an invitation-only site with more than 60,000 fingerprints for sale.

But going to these API portals is not easy. Thanks to the investigative work of the JDN who contacted the big French banks to know if they have deployed their portal, the address of it and how many APIs have been put online, we have a global overview of the French banking landscape with PSD 2 opening requirements.

Using a Genesis digital identity is not complicated. Just buy it and load a browser extension provided for this purpose, available for Chromium-based browsers. From that moment on, it’s as if the criminal put on a mask. His online behaviour now impersonates the stolen identity. If the mask is of good quality, it will allow him not to raise an alarm when performing a fraudulent purchase. 

It’s in this context and faced with these impersonations, that the notion of strong authentication becomes relevant. Indeed, it would be sufficient for all transactions to be systematically validated by a second authentication factor in order to make the fraudster of digital identities ineffective in its described form. The notion of strong authentication required by the Payment Services Directive 2, therefore, requires banks to set up a procedure that seems to be the only way to really fight against digital identities fraud.


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