Another week, another launch of a payment product offering enhanced convenience for the consumer. Square’s launch of its P2P payment service Square Cash last week is just the latest in a line of payment products designed with the consumer in mind.

Growth in new channel payment revenue is already startling. Visa announced this month that in the UK a quarter of all spend on Visa-branded cards is spent online. The total has nearly doubled since 2009 and close to 20 per cent of transactions are originated by customers residing outside the UK.

The data provides some insight for the future growth of online transactions across other major markets in Europe. The plan, for example, to enable Germany’s 90 million girocards for online payments is likely to contribute to this growth.

But as non-traditional payment volumes increase so does the number of fraudulent transactions, in spite of the barriers – from SMS authentication, to card readers and other interventions such as geo-blocking – put up to protect the customer.

While convenience is viewed as essential to get any new payment product front-of-wallet, payment security may often be an unintended trade-off.

The lessons of the global banking crisis and the repercussions for the wider economy are, by now, of course widely understood. The direct implications however for credit-weary, cost-conscious consumers and cash-strapped merchants, anxious to ensure transaction and payment infrastructure costs are minimised, may mean payment product security is being side-lined.

Reflecting on the European Central Bank’s (ECB) recent “Recommendations for the Security of Internet Payments” (SecuRe Pay) Germany’s “girocard online” initiative will probably use some form of dual factor authentication – either by card reader or the transaction number generator (TAN) system common among Germany’s retail banks.

On their own however these systems are often inadequate. At the end of October, the German broadsheet newspaper Süddeutsche Zeitung published an article on issues with this security method. Recently, there have also been successful attacks against card readers or key generating tokens.

Such systems provide only a partial solution to the challenges of fighting fraud in the increasingly complex world of payments. Apart from the high cost of investment, dual factor conventions typically focus only on securing specific weaknesses, such as verifying the customer’s identity at the point of online purchase.

With around 25 per cent of fraud occurring across channels, this is clearly insufficient. Furthermore once the authentication systems of a single channel are breached, the investment is of no value and a new authentication system is needed.

So what’s the answer? Conferring additional complexity on the consumer to authenticate their identity makes the payment product less convenient and means it is unlikely to be widely used.

Objections to invasive procedures such as 3D Secure that introduce additional obstacles before payment is completed are understandable as competition between online retailers intensifies.

At the same time, attempting to secure transaction data incrementally with a combination of system patches, new point solutions or new transaction conventions such as those outlined in the ECB SecuRe Pay initiative, are often disjointed and may have unintended consequences.

For participants in the payment chain struggling to understand how to reconfigure their fraud prevention architecture without compromising on convenience the challenge is not quite as great as it might seem.

Installing off-the-shelf technology that provides an additional layer of security, that works across all channels, and complements existing payment habits, can form part of the solution. Systems like those of Iris Analytics’, which offer intelligent transaction analysis, can help to ensure maximum customer convenience and reduce costs at the same time by avoiding the need for a non-mandated dual factor authentication procedure. For example, a low value payment that the consumer regularly makes, need not always be subject to strong authentication processes.

Organisations that think carefully about effective fraud management architecture in this way, with no let-up in the fight against fraud, and no additional convenience trade-off, can win the wallet war, secure customer loyalty, and reduce their fraud operations costs.