UPDATED 14:43 EDT / APRIL 17 2019

CLOUD

Stripe picks up biometric authentication startup Touchtech

The highly publicized online copyright and privacy laws currently being implemented by the European Union are only part of the regulatory changes facing the tech industry in the region.

There’s also PSD2, an upcoming directive that will enforce increased security for e-commerce purchases. In preparation for the new regulation, online payments giant Stripe Inc. today announced that it has acquired an Irish startup called Touchtech Payments Ltd.

Touchtech offers a service that helps banks verify the identities of customers when they make transactions. Its technology addresses the part of PSD2 that is most pertinent for Stripe, which is a security standard called Strong Customer Authentication. When it goes into effect this September, this section of the directive will make two-factor authentication a requirement for most online purchases.

Touchtech’s service streamlines the verification process by allowing consumers to use their fingers as their second form of authentication. It uses the fingerprint scanner on the user’s handset to authenticate their identity, which is touted as more convenient than traditional two-factor authentication methods such as SMS codes.

Stripe will offer Touchtech’s service alongside its existing financial products to provide better support for the upcoming regulatory requirements. As part of the same effort, the company is also rolling out a number of enhancements to its flagship payments platform’s front end.

Stripe is releasing an updated checkout page that detects if Strong Customer Authentication applies to a given purchase and enforces the appropriate authentication rules. It’s joined by a new application programming interface, Payment Intents API, that allows online merchants to build their own custom checkout forms with two-factor authentication support. Stripe’s goal is to minimize the amount of code that online retailers must write to comply with the upcoming regulations.

That should be an especially big boon for smaller online stores, which may not have the resources to implement new security features on their own. For this reason, other major players such as PayPal Holdings Inc. have also started offering tools to address the Strong Customer Authentication standard.

Stripe’s acquisition of Touchtech follows a funding round in January that saw the company receive a massive $22.5 billion valuation. Its backers include Andreessen Horowitz, Elon Musk, Google LLC’s Capital G venture capital arm and numerous other big names from the tech industry.

As for the Touchtech team, it will work as a standalone group out of Stripe’s Dublin office.

Photo of Stripe founders Patrick and John Collison: Stripe

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