Security, the New Payments Ecosystem and the Need to Educate the Consumer (Or Ask Them to Unclog Your Sewer!)
When it comes to any payments ecosystem, you must remember that we are talking about MONEY. More importantly, people’s money (like yours and mine). In any conversation in this space, secure is something that is assumed. A consumer simply won’t use a new system if they don’t believe it is secure. Unless of course it’s free Wi-Fi. As we have seen, folks are willing to do almost anything to get free access on their devices, even agreeing to clean toilets! (This was a real thing… one hotspot operator added it to their Terms of Service fine print). When we talk secure, it’s important that we keep this in mind: secure is not just a piece of the Hierarchy of Payment Needs, it’s an integral part of it, which is why it sits directly on top of the foundations. Without this layer, the whole ecosystem collapses.
The Evolution of Payments
As we leave the comfortable and known confines of yesterday’s payments ecosystem, questions around security are normal and expected. You can’t have trust in something without knowing it’s secure, or that there are fail-safes in place if something does go wrong. In the past, we had very defined payment scenarios, where you knew without a doubt where liability lay if something did go wrong – the ‘unhappy flow’ was accounted for. However, as we move to a more open environment where new parties are joining every day, it is only natural to have your head on a swivel. After all, we are only as safe as the weakest link in our workflows.
Regulation and Recreation
A more open environment means that our sandbox needs to have built-in security, and an ability to manage threats both at the ecosystem level and within our solutions. The flexibility in the new environment, and in the applications themselves, makes this possible today – a marked change to the ‘old’ payments ecosystem. Applying the same logic, agreements and regulations that were in place to manage the older ecosystem will be strained to breaking point in the new ecosystem. This is why we are seeing new regulations like PSD2, The UK Open Banking Initiative and General Data Protection Regulation (GDPR) coming into play.
A major challenge is how we layer in secure elements without impacting the ‘need for speed,’ by which I mean real-time! Luckily for us, Moore’s law is at play, which is making it possible to process information in nanoseconds. But there’s also a change in the user experience; an opportunity to gather information ahead of the transaction and view further upstream than has ever been possible previously. This is thanks to the increasingly “open” nature of payments at the core of our discussion. As we open up access, we create a two-way street: we not only broadcast out payment capabilities, but in return we can marry-in APIs from the broader API ecosystem. Whether those are geo-location based services or facial recognition software, we need to innovate in the secure layer without impeding the speed of the transaction. This may actually make transactions ‘lighter’ and able to move quicker, ultimately propelling us towards a more secure ecosystem!
Getting Your Hands Dirty
While it sounds counterintuitive to some, the New Payments Ecosystem has great potential to not only embrace the need for speed, but also to do so more securely than today. It comes down to embracing the change, rolling up your sleeves and playing with new technology, be it distributed ledger, blockchain, or Open APIs. All have the potential to solidify the baseline assumption of security needed to allow the New Payments Ecosystem to strive.
Related Blog Posts
European Banks Have the Right Tools to Stay Ahead – But Will Big Tech Overtake?
Open banking and immediate payments have come a long way, according to the panellists who joined me during the ‘Open Banking in an Instant World’ session at EBAday in Stockholm recently. The building blocks are now falling into place through the introduction of national and regional schemes, open banking initiatives, regulations such as PSD2 and the acceptance and use of APIs.
Checkout Optimization Challenges: Top Tips for Online Merchants
As the current conference season draws to a close, it’s time to reflect on one of the key topics topping the agenda for many online merchants: checkout optimization.
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
How UPI is Driving India's Shift from Cash to Digital Payments
The Indian economy has traditionally been heavily dominated by cash, while experiencing low adoption of various online payment systems including National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and inter-bank mobile payments. The dominance of cash is evidenced by the ratio of cash withdrawals at ATMs vs debit card usage at Point of Sale (POS)—ATM transaction volume is more than 2x greater than POS.
Cooperation, Consultation and Collaboration Are the Keys to Countering CNP Fraud in Australia
As Europe, and other parts of the world ramp up for regulatory changes around PSD2, Australia is about to launch its own strategy to combat Card Not Present (CNP) fraud.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Success Speaks: Surprising New Ways Students Want to Pay
Colleges and universities are facing the dual tasks of accommodating not only new payment methods, but also a new generation of students, Gen Z, whose expectations differ greatly from even millennials. How can higher education institutions meet these demands?
In our latest Success Speaks webinar, experts from Temple University, FutureCast, ACI and MTFX Group of Companies explored today’s payments landscape for colleges and universities, payment desires of Gen Z, innovations the higher education sector is already implementing and how schools can better assist with international payments.
Women Must Choose to Rise Up Despite Past, Current and Future Circumstances
Money20/20, Europe’s biggest payments and fintech event, was recently held in Amsterdam and featured Rise Up Money20/20, a global program designed to address the gender imbalance in leadership positions within the financial services and fintech industries. A cohort of 30 female professionals was selected to take part in an exclusive curated agenda, complete with a series of bespoke content sessions, one-to-one mentoring and unique networking opportunities.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.