Australia's payments industry has responded swiftly to a call from the RBA's Payments System Board to address the rising cost of card-not-present fraud in e-commerce.The Australian Payments Network(AusPayNet) on Tuesday announced that recent high-powered consultations with retailers, card issuers, acquirers, consumer groups and other stakeholders had reached a "clear consensus" for developing a system-wide strategy to curtail CNP fraud.Members of the Payments System Board noted in the minutes of their meeting on 23 February that they looked forward to the industry finalising a strategy to address the online fraud problem within the next six months.The PSB also noted that anti-fraud measures adopted by AusPayNet should balance the interests of all stakeholders, including merchants.More than 70 industry bodies involved in the consultations have given in-principle support to implementing multi-factor authentication to better secure online transactions.While this proposal is likely to upset some internet retailers worried that it may complicate online shopping experiences, AusPayNet chief executive Dr Leila Fourie said multi-factor authentication could be used in ways that minimised customer disruption."The industry is mindful that multi-factor authentication can frustrate online shoppers and lead them to abandon their online carts," Dr Fourie said."Industry is addressing this by limiting the use to unusual or high-risk transactions."We can reduce fraud without negatively impacting the online customer experience through intelligent friction that balances security and convenience."Precisely how "intelligent friction" will operate has not been explained, but a key retail industry group - the Australian Merchants Payments Forum - is supporting the push for two-factor authentication.The forum represents around 40 retail organisations and peak bodies.The chair of the merchants' forum, Russell Zimmerman, said it was critical that anti-fraud measures were implemented consistently across the retail sector so that no particular segments of the e-commerce market were disadvantaged."Whatever system is put in place we want to make sure that it operates seamlessly and consistently for all retailers regardless of their size," he said."The anti-fraud measures should deliver a similar experience for retailers and the consumers that transact with them, without creating competitive advantages to any individual or class of business."Zimmerman said that two-factor authentication could include a range of identity verification methods.AusPayNet indicated that multi-factor authentication might include a combination of biometrics such as fingerprint, face or voice recognition with the sharing of confidential information between a customer and their financial institution (PINs and passwords) before an online transaction is settled.Online consumers could also be verified by confirming their ownership of the smartphone or other electronic device they transact on.Offshore retailers present one of the challenges for implementing measures to secure payments involving Australian bank account holders.If popular retailers such as Amazon.com, Etsy or Asos refuse to adopt the new payments security protocols then the shopping options of Australian consumers could be crimped.