The Telco Transformation Tight Rope: Balancing Risk and Reward
In a previous blog post, we looked at the towering mobile payments opportunity for those MNOs and MVNOs that can build customer trust and convenience through innovation to become a digital marketplace.
But, it is safe to say that while the digital marketplace model could be a real opportunity for telcos, taking this route is not without some risk.
Today, every dollar of fraud actually costs merchants $3.40. Mobile channels are inherently high risk, representing over 50% of online fraud costs. This means it is vital for telcos to take the time to understand the specific fraud prevention challenges around mobile payments – before they walk the line towards transformation.
Assessing the trip hazards and navigating the pitfalls
As with any other market, geography or channel, genuine customer behavior (as well as fraudsters’ tactics) are distinctively different in the mobile payments channel and – to make sure they don’t undermine the customer experience – it is important for telcos to understand how the typical traits of customers and fraudsters might affect their payment and fraud prevention strategies.
For instance, mobile payment transactions are often lower in value than other online or in-person payments, and ‘on the go’ transactions may also mean that location data might not match up with customer records. There are also implications for authenticating customers – with the smaller size of keypads making data entry more prone to error and, of course, the chance of devices being lost or stolen heightening the risk of exposed personal data or fraudulent use.
The trick for telcos is to make sure that genuine customers are recognized and supported while fraudsters are effectively blocked. Achieving this ideal balance requires a comprehensive view of behaviors, along with flexible, tailored fraud strategies that take into account the nuances of mobile payments.
Delivering perfect fraud prevention performance
As telcos look to introduce innovation and work towards transformation, there are a few best practices that can help ensure they continuously balance excellent customer experience with strong fraud prevention performance. These include:
- Profiling customers to understand and record typical behaviors and preferences
- Testing and tailoring rules on a continuous basis to accommodate emerging trends
- Rescreening transactions against freshly confirmed fraud information to minimize future losses and shut down fraudsters
The speed of change in fraud means telcos need the ongoing ability to adapt strategies – and this is one of the areas where a supporting payments partner can help take off some of the weight. An expert partner can provide all the right tools, technology, knowledge and data to help telcos safely achieve their goals. The right partner can in fact be more than just a safety net, they can be a lifeline, giving telcos the confidence to forge ahead and deliver the innovation that is needed to increase their share of mobile payments and strengthen customer relationships.
Finishing with a flourish
The final chapter in our insight series, written in collaboration with telco industry experts Red Dawn, focuses on the specific fraud issues that telcos face in expanding their digital services and mobile payments presence. It explores the different types of risk and fraud that telcos must watch out for, the challenges created by offering mobile payments, and how telcos can mitigate these factors to take full advantage of the mobile payments opportunity.
Sign up to receive your copy of the complete insight series: www.aciworldwide.com/telco
Related Blog Posts
Payments Are Forever
The last few years in the payments universe have been nothing less than remarkable for those who have toiled in the back office. Or for those who have worked in the figurative backstage of banking as other business initiatives have garnered the applause and attention in the spotlight.
Its the Most Wonderful Time of the Year for Payments
As 2015 quickly comes to a close and we ready for an exciting New Year, I/we thought it would be prudent (or at least kinda fun) to provide yet even more prognostications for 2016, because after all, who doesn’t love predictions?
PSD2 the Iceberg That Banks Must Navigate
PSD2…it sounds like a game console for the young Gen Y and Gen Z kids. At least that’s what I originally thought…and, geesh, how wrong I was! When it comes to bank disruption, PSD2 is one of the stars (though loved by some, loathed by others—akin to the greatest quarterback in the history of the NFL, Tom Brady). In this next installment of my ongoing conversation with colleague and Master of the Fender Stratocaster, Paul Thomalla, Paul fills me in PSD2 and what it means—to banks, non-banks and consumers.