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CONTACTLESS CARDS: 5 SECURITY MYTHS DEBUNKED

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Ian Wright, Founder of Merchant Machine

 

Contactless payments are becoming more prevalent in the UK, with a previous study by Merchant Machine revealing cash usage in the UK is on the decline and is forecasted to hit 0% in just five years– as soon as 2026. Regardless of the fact that this technology is available, customers aren’t fully aware about how safe this means of payment is, with some individuals being concerned about the security due to contactless payment information being transmitted wirelessly.

A number of myths have built up around contactless payments, which the experts at Merchant Machine have taken it upon themselves to debunk.

 

Ian Wright

Myth 1: If a criminal approaches you with a terminal, they may steal your contactless card electronically and use it to complete a fraudulent purchase.

To obtain a terminal for the purpose of starting a company, you must visit a terminal provider. This means that they know everyone who owns a terminal in the country. Due to contactless payments being electronic, they can be tracked. The terminal, card owner and payment can all be identified.

Thieves can only get your account number and expiration date using these devices, meaning they would not be able to complete a transaction. If the thief has used a registered terminal, the transaction would also appear as processed, allowing the terminal provider to identify the thief.

 

Myth 2: Thieves can duplicate contactless cards

Some people are concerned that if your contactless information is intercepted, a thief will be able to make a replica card. This is incorrect. During card transactions, the scanner receives a one-time code from the card/device that validates the payment. This is an unique number that would be impossible to duplicate. One-time codes are generated using sophisticated encryption technologies stopping thieves from being able to duplicate any cards.

 

Myth 3: I could accidentally pay another customer’s bill or make several consecutive payments

Payment terminals are designed to prevent payments for the same transaction from being made again, reducing the chance of being charged twice. If a terminal detects several cards, it may ask for only one to be presented, or the transaction may be cancelled to avoid double billing. Fears of paying another customer’s bill accidently are unnecessary, as the card must be placed within a very short distance (one to two inches) of the payment terminal to be read.

 

Myth 4: Even if a thief cannot counterfeit your card, they can make purchases online or by phone

Contactless is nothing more than a feature to enable communication between a card/device and a terminal. It is technology that is only relevant in the physical world. Just like a regular card, a contactless card does not know your name, billing address, or even the 3-digit CVC code at the back of your card. Since these data cannot be transmitted, there is no risk someone gets access to it through contactless communication.

 

Myth 5: Apple pay or Google wallet contactless payment is not secure.

When contactless payments first made their debut on smartphones, concerns were raised about the security of card details being stored on, and transmitted from, a smartphone. In the case of ApplePay, for example, card details are only transmitted when the phone detects a Chip & PIN machine that is requesting payment and  requires either a passcode, retina scan or thumbprint to complete the transaction, along with the 16-digit card number transmitted is semi-randomized per transaction. These features give contactless payments via a phone another level of security.

 

 

Banking

Bringing Automation to Banking

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Ron Benegbi, Founder & CEO, Uplinq Financial Technologies

 

Automation is everywhere you look these days; from supermarkets to warehouses to automobiles. This prominent trend shows no sign of abating anytime soon. However, some sectors remain behind others when it comes to adopting automated technologies. Banking is one such segment, but there’s now evidence to suggest that this could be about to change.

 

What do we mean by automation?

There are a lot of ways to define automation, but broadly the term applies to any technological application where human input is minimized through design. Over the years, automation has evolved from a basic level, which took simple tasks and automated them, all the way to advanced automation powered by Artificial Intelligence (AI). In general, automated solutions work to increase productivity and efficiency within businesses and often result in a reduction in costs associated with human capital.

 

Ron Benegbi

Why has the banking sector been slow to adopt automation?

The banking sector has been built on a number of long-standing, tried and tested processes and protocols, which have been continually fortified and refined over time. This is one explanation as to why the sector has been so slow in adopting new, automated methods within its operations. Additionally, many major financial institutions have spent decades building their own internal legacy computer systems, which are often incompatible with modern automated solutions.

When combined, these two issues have caused a significant lag in the banking sector with regards to the adoption of automated technologies. This lag has created a market opportunity that a number of fintech providers have been able to exploit in recent years. Offering a more responsive and tech-first user experience, many fintech providers are leveraging the power of automation to better meet the banking needs of their customers. However, there is still time for the banking sector to start bridging this gap.

 

Does automation have a place in the banking sector?

The opportunity for automation to play a role within banking can be transformational.

To achieve this, it’s important that legacy organizations begin to learn from their more tech-savvy, smaller counterparts. If used effectively, automated financial solutions can greatly improve the experience of banking customers, both on a personal and business level. So, what exactly does this change look like, and how far away are we from seeing it become a reality?

A good place to start is the small business credit lending process, where not much has changed since the 1980’s. Over that period, the world has greatly transformed, but the methods used to assess credit worthiness have remained somewhat static. For the most part, banks assess data related to businesses’ accounting and banking records and from credit scores. For many businesses, especially the newer and less established ones, this antiquated approach is having a detrimental effect. In fact, it’s often cited as a contributor to the huge funding gap between SMBs and their larger counterparts.

 

How can automation benefit the banking sector?

By adopting more automated technologies, lenders in the banking sector can begin to assess more comprehensive information when making credit decisions. Notably, new methods exist, which enable additional data sets to be evaluated, in order to build a more accurate financial depiction of a business’ overall position. This data can come from sources like external market attributes, economic indicators, demographic data and exogenous shocks.

By leveraging additional data sets through new methods of financial automation, banks are now in a position to respond more effectively to small businesses, including those in emerging and evolving markets where there is a lack of conventional sources of information.

With more ways to access funding, facilitated by alternative data and automated processes, small business owners can improve their operational efficiencies and accelerate their growth efforts. In doing so, legacy oriented financial institutions can now better equip themselves in protecting against new, nimbler tech-based disruptors.

 

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Banking

MYTH BUSTING THE ROLE OF OPEN SOURCE IN FINANCIAL SERVICES

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Nigel Abbott, Regional Director North EMEA, GitHub

 

There is no denying the financial services (FS) industry is under pressure to innovate. Not only have customer and consumer expectations for digital experiences surged in recent years, but the emergence of nimble and ambitious fintechs have disrupted the market. Yet, despite striving for innovation being table stakes across the industry, FS organisations inevitably face familiar hurdles that slow their progress, including concerns surrounding security, compliance, and the ability to act fast.

Open source is increasingly seen as a route to drive innovation and create new value. The FS sector’s utilisation of open source and the transformative role it can play is accelerating – on paper, at least. According to the recent Fintech Open Source Foundation’s (FINOS) 2021 State of Open Source in Financial Services survey, as many as 80 percent of FS leaders said that innovation, reduced time-to-market and total cost of ownership are factors for FS businesses to consume open source.

Nigel Abbott, Regional Director North EMEA -GitHub

But the reality is these positive adoption figures don’t tell the whole story. The survey also revealed that 75 percent of FS technology leaders said their businesses are either not “open source first”, or that they did not know if they were. Tellingly, less than one in ten (eight per cent) said that their business has put in place policies to encourage open source contribution.

The statistics point towards disparity between uptake of open source and the ability to use it to its full potential. But why?

For me, it comes down to some common myths about the role of open source that need demystifying:

 

Myth #1: There are limits to the innovation that open source can deliver

This could not be further from the truth. All enterprises, including FS companies, rely on open source software to build the best software for their customers, improve infrastructure, and unlock the potential of their engineering teams. Nationwide, for example, has completely redesigned its DevOps processes to respond faster to market changes and keep pace with customer expectations to remain relevant. The impact is transformative when they actively embrace it and participate fully in the open source community, creating a win-win situation for end-users. 

 

Myth #2: Data can be shared without consent 

Quite the opposite. Open source does not require FS businesses to share all their secrets and give away their competitive advantage. Instead, taking an “innersource” approach allows financial institutions to take the skills of developers who are accustomed to using open source tools and brings these inside the company firewall, providing a secure internal platform for working collaboratively on projects.

 

Myth #3: Open source is not secure

The most common misconception is that higher security risks are associated with code being openly available to anyone who uses it. But the open concept is, in fact, one of the biggest security strengths of open source. This is because of the collaborative nature of how code is built. The open source community has a shared responsibility for developing and maintaining secure code, and there is a vast global pool of developers identifying and fixing security issues. Supported by the right tools and processes, open source makes it easier for developers to code securely throughout the entire software development lifecycle, reducing the amount of time and financial investment in delivering secure products. Research from Red Hat found that security is regarded as a top benefit for enterprises using open source.

 

Myth #4: The open source community lacks finance sector contributors

This is untrue. Financial enterprises of all shapes and sizes are prominent participants in the open-source community and lead by example, sharing meaningful code contributions. Challenger banks and institutions such as Goldman Sachs contribute to open source initiatives via FINOS. By opening their code and ideas, FS companies can share lessons and support the whole community – helping them deliver better services and more value to their customers. And crucially, they are advancing a community that they can systematically tap into and benefit from.

Open source is already delivering innovation in the FS sector. But the bottom line is that there is so much extra value it can bring. Unlocking the full potential of open source to effect change does not just require buying DevOps tools. Open source requires organisation-wide understanding and support, a culture of collaboration and a progressive DevOps and governance process to thrive. Only then can it deliver its true value and accelerate innovation.

 

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