Lionel Grosclaude, CEO, Fime
As the number of devices and connected services rise, our lives are becoming increasingly digitized. Keeping up with this evolving landscape is vital, and 2023 promises to bring with it a host of new use cases and innovations. New technologies are coming to market that provide a greatly enhanced user experience that does not compromise on security. Innovative solutions such as SoftPOS are challenging traditional payment methods, while account to account payments have the potential to shake up the entire payments ecosystem.
In this blog, we explore some of the key trends in the ecosystem that look set to have a major impact on the way we live in 2023. From the changing nature of authentication to paying with your car, the ever-digitizing world will continue to transform our lives.
Streamlining authentication to address increasing fraud
One major trend from 2022 is the continued evolution of the fraud industry. Gone are the days of simple fraud management strategies; an entire ecosystem exists in its own right exclusively for buying, selling and exploiting sensitive data. Instances of fraud have increased by 20% over the past year, highlighting the clear danger the ecosystem is facing.
To combat this trend, new authentication frameworks can provide a balance between strong security and seamless acceptance. A combination of active and passive authentication can ensure that the payments flow is secure while limiting the impact on the customer experience.
Biometric authentication is leading the way here. Utilizing biometrics, especially for multi-factor authentication, can expediate and strengthen the authentication process. Keystroke dynamics is a good example: a behavioral biometric modality that analyzes how a user types their password into their keyboard. This can be deployed as a multi-factor authenticator as it combines the knowledge of a password with the manner of typing, eliminating the need for an extra step of authentication. While removing all passwords is something that we may see in the future, this is not expected anytime soon. Therefore, it makes sense to harness the data available to increase security and reduce friction without changing consumer habits.
Delegated Authentication
Authentication processes are also being enhanced by delegating power to merchants. Lowering authentication friction is key to a seamless user experience. Therefore, merchants across Europe are investing in advanced authentication capabilities to allow them to process SCA-compliant transactions without purchasers being redirected to a banking app or having to enter a one-time passcode. This is allowing them to help reduce fraud and improve authorization rates, all while retaining ownership and control of their checkout experience.
Furthermore, major global payment schemes are introducing new regulations that will see banks recognize the authentication work done on the merchant side. This regulation also prevents banks from doing additional strong authentication if the certified merchant has already done it. This means that merchants are able to leverage industry authentication standards like FIDO Alliance to create their own checkout journey to reduce the friction between the customer and merchant services. This helps combat both fraud and cart abandonment, helping to deliver higher sales conversion rates and a better return on investment.
Digital Identity Infrastructures
Another trend to monitor in 2023 is the need for a robust digital identity infrastructure. Around the world, systems are being put into place to create seamless online platforms for storing and managing large amounts of personal data. These will facilitate the next generation of smart solutions across countless use cases. The Aadhaar solution is already in place in India, creating a nationwide database of biometric and demographic data. Meanwhile, the European Commission’s digital ID initiative is on course to be available to 80% of people in the EU by 2030. These advances emphasize the need for state-of-the-art authentication and data protection solutions.
The emergence of in-car payments
Connected cars have been an emerging use case over the course of 2022. Vehicles that offer real time traffic alerts and vehicle diagnostics, and can even stream high resolution videos, are becoming more and more common. In this age of automotive connectivity, car brands now have an opportunity to enhance their offering for drivers and merchant partners: in-car payments.
Integrating everyday commerce into the vehicle itself through in-car wallets will allow users to pay for fuel, parking, electric vehicle charging, drive-thru meals, or anything else from the comfort of their driver’s seat. Juniper Research predicts that the annual value of in car payments will reach $86bn by 2025. And with delegated authentication now mandatory for in-car payments, transactions are secure while delivering an enhanced user experience. Leveraging this trend gives automakers an opportunity to build new revenue streams through partnerships and subscription services with merchants.
Navigating this changing landscape
Keeping up with all these trends presents a considerable challenge to stakeholders. The knowledge and investment needed to create secure, reliable and innovative solutions can be hard to find and costly to bring in-house. By working with a trusted partner, clients can create and launch trusted solutions by making use of its cutting-edge consulting and testing services. Fime works strategically to help its clients turn ideas into reality, swiftly take products to market, and achieve competitive advantage. Working together, Fime turns powerful innovations into the future of trusted transactions.
