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CASHLESS AFTER COVID-19: WHY TOUCH-FREE TRANSACTIONS COULD SEE US FINALLY SAY GOODBYE TO CASH

By Vince Graziani, CEO of IDEX Biometrics ASA

 

The impact of COVID-19 on the global payments industry is likely to be profound. McKinsey predicts that activity in the sector could drop by as much as 8-10% of total revenues due to the pandemic, a reduction of between $165 billion- $210 billion. That’s compared to the 10-11% revenue reduction seen following the 2008 global financial crash. The devasting outcomes of the pandemic have not only created consequences for our immediate lives and the economy but are already causing shifts in consumer behaviour relating to payment that will resonate for years to come.

In the payment industry, the pandemic is accelerating a shift towards a cashless economy. Back in February, before the pandemic was declared, UK Finance predicted that the UK will become virtually cashless within the next decade – which is only likely to accelerate in the current climate. Meanwhile, in the midst of the pandemic China has launched a sovereign digital currency, the eRMB, anticipating cash will diminish even further. In March, the World Health Organization advised the public to use contactless technology where possible, to prevent the spread of the disease. Since then, retailers have begun refusing cash payments and a concern around sharing potentially ‘contaminated’ cash has grown.

 

A reason to give up cash

It seems that while a cashless world has been on the horizon for a number of years, the coronavirus pandemic has finally given the public a firm reason to give up cash. We are currently seeing a widespread change in consumer behaviour propelling the desire for a cashless society forward – including for those who were previously sceptical of going cashless.

For many consumers, using contactless payments can provide much needed reassurance while shopping in stores during the pandemic. While these new purchase options may seem unusual for some, COVID-19 has caused retailers and consumers to seek touch-free payment alternatives. It has quickly become second nature for consumers to tap their card to pay for goods and services instead of using cash or punching in a PIN.

So, now there is significant demand for a cashless society, how do we actually get there? And how do we make sure it is secure and accessible to all?

 

Making payments touch-free and secure

The answer is to make all payments touch-free. We already have contactless payments, of course. The limit for PIN-free payments has even risen around the world in response to the COVID-19 outbreak, reaching £45 in the UK, €50 in all EU countries and even up to $250 in Canada– allowing consumers to make more payments without having to touch a PIN pad. But in a post-pandemic world, all payments, regardless of value, need to be touch-free to protect consumers.

And while contactless methods are the most commonly available touch-free payment option, they lack added security and authentication. As Strong Customer Authentication (SCA) grows in importance, payment methods must have two-factor authentication, as well as convenience and hygiene. But with PINs increasingly recognised as insecure and PIN pads deemed ‘unclean’, consumers are now worrying about their health as well as contactless banking fraud while making a payment.

Consumers, particularly those cautious about potential fraud from transactions without a PIN, may need a greater layer of security to overcome trust issues around contactless payments. While a signature can be forged, a PIN cracked or an online account hacked, a fingerprint is virtually impossible to replicate. Therefore, to resolve fraud uncertainty, the payments industry must adopt fingerprint biometric authorisation to provide greater security and protect consumers.

 

Finding the balance

Biometric payment cards provide the ideal balance of security, convenience and hygiene for transactions, without having to touch anything beyond your personal payment card. When paying for goods with a fingerprint biometric payment card, the consumer only needs to touch the sensor on their own bank card while holding it above the terminal for a contactless payment – just like they do today. This two factor authentication links the person to the payment card in a sanitary way, eliminating the incentive for theft or mis-use of payment cards.

We know that consumers want a transaction process that is fast and free from hold ups. In the age of COVID-19, increased touch-free authentication with your fingerprint will secure the payment card, removing the need for PINs and reducing the need for the payment limit, all while making the transaction process more hygienic.

 

Preparing for a cashless world

As the pandemic continues, and consumer’s payment behaviour continues to change, it seems likely that the UK will ultimately become a mostly cashless society sooner than we thought. But the transition must be well supported to provide all consumers with a secure and easy way to manage contactless payments.

Biometric smart payment cards are vital to help consumers overcome trust issues around digital payments. The payment industry must now adapt and adopt biometric technology to ensure that payments are stable, secure and sanitary as we finally embrace a cashless world.

 

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GALA TECHNOLOGY SELECTS NUAPAY TO ENABLE OPEN BANKING PAYMENTS

Nuapay, powered by Sentenial, today announces it has been chosen by Gala Technology, a payment security solution specialist, to provide Open Banking payments to its partner network and direct merchants across multiple sectors including retail, hospitality, and financial services.

Gala Technology’s multi-award winning SOTpay ‘Pay-by-link’ solution simplifies PCI DSS requirements and protects merchants against the ever-growing risk of fraud by ensuring that the transactions are authenticated, shifting liability and often lowering acquiring processing costs. SOTpay’s integration with Nuapay’s Open Banking platform now enables them to process non-card payments.

Nuapay’s FCA-licenced Open Banking payments service enables Gala Technology’s partners and merchants to accept payments via any sales channel of choice, including telephone, web chat, SMS and social media. It can do this without requesting sensitive card data, which ensures SCA compliance and eliminates fraudulent chargebacks.

“The capabilities of Open Banking have become more apparent in 2020 as merchants have been forced to explore alternative contactless, mobile and ecom-friendly payment methods that can be accessed quickly and are lower in processing costs, due to a need to respond to change brought by Covid-19.” shares Nick Raper, Head of UK at Nuapay. “We’re thrilled to be working with Gala Technology, as we  have a shared drive to eradicate payment fraud. This partnership will help to increase widespread adoption of live bank transfer payments as SOTPay gives us an exceptional opportunity to demonstrate Open Banking payments’ usability and benefits to new audiences.”

Nuapay is one of the only PISPs which offers a fully inclusive open banking payment initiation, webhook notification and payment account solution; which quickens checkouts, speed-up access to cash flow, reduces processing costs, and enables full reconciliation and batch settlements of transactions. Gala Technology’s customers now have access to new payment innovation and will be able to perform refunds or make instant payouts.

 

Steven Jones, Commercial Director at Gala Technology, said: “We chose to work with Nuapay as their complete Account-2-Account payments capabilities and high customer service levels are unparalleled. Looking forward, Nuapay’s presence within the UK and Europe will greatly help us reach new clients and will extend our service offerings to existing clients too. Nuapay’s Open Banking payments solutions help us to provide a better service; in turn, the time, money and resources our customers save will enable them to focus on growing their businesses in a more profitable way.”

Nuapay’s PISP processor has a single connection to all major banks in the UK and a growing number of connections across Europe, ensuring that Gala Technology’s clients’ payments will be supported, no matter where their customers bank.

 

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THE EMBEDDED BENEFITS IN ESEF DIGITAL FINANCIAL REPORTING

The inclusion of a simple link delivers serious gains in transparency, trust and real time verifiability for the whole financial ecosystem. It’s another digital feather in the LEI’s hat, explains Stephan Wolf, CEO, Global LEI Foundation.

 

In a battle for significance, no other public facing business document can match the annual financial report. It is the document that a public corporation must, by law, publish to describe its operations and financial condition, and to chronicle its activities over the past twelve months. Shareholders, investors and the wider financial ecosystem make innumerable strategic and operational decisions based on its contents.

In today’s digital age, then, it is little surprise that the European Securities and Markets Authority (ESMA) has mandated that annual financial reports published from the start of 2020 follow a consistent digital configuration, known as the European Single Electronic Format (ESEF) and, in them, embed their Legal Entity Identifier (LEI).

Stephan Wolf

On first glance, the ESEF format appears to be designed to drive financial report production into a convenient paperless form factor. While this is both true and highly commendable, an ocean of additional potential is revealed by ESMA’s insistence that corporations embed their LEI. This mandate will heighten transparency, enhance trust, and provide instant and non-repudiable verification that the organisation filing the report is, indeed, who they claim to be. These far-reaching benefits are all enabled by the report linking to the filing entity’s verified LEI reference data held within the Global LEI Index.

The simple process of embedding an organization’s LEI  – or, indeed, that of its affiliates, subsidiaries and parent companies – within an ESEF financial report means that regulators, investors, traders and other financial stakeholders, can consolidate and verify information on the filing entity faster and more conveniently than ever before.

LEI reference data includes business card information on an entity, including name and registered address, together with relationship data which confirms if the entity owns, or is owned by, other entities. This increased transparency relative to an entity’s ownership structure means that relationship networks between LEIs can be quickly and automatically established, since the LEIs of the filing entity, its affiliates, subsidiaries and parent companies are all provided in the new machine-readable ESEF format. Usefully, because the reference data is reverified annually by GLEIF accredited LEI issuers, it is always accurate and up-to-date. The net result is a substantially more useful document for end users, which is also verifiably trustworthy, authentic and integral.

ESMA has published the Global LEI Foundation’s 2019 annual report on its website to provide a best practice example of a report published in the ESEF format, which other preparers can reference. The report is published in human and machine-readable Inline XBRL and HTML formats, with LEIs embedded within both the annual report and the digital certificates of the report’s signing executive officers. The combination of these two features provides something completely unprecedented: instantly available, digitally verifiable credentials that confirm both the authenticity of document and the key individuals responsible for its content.1

Beyond the single report, the LEI embedding process creates broader opportunities for the financial ecosystem. Aggregating information on companies from multiple sources is dramatically simplified, making the job of comparing standardized financial information both faster and easier. This can be accomplished either manually, by ‘clicking through’ to view the LEI reference data, or via an automated process, saving yet more time and eliminating the risk of human error. In time, this level of facility will lead to the automated creation of online databases that use the linked LEIs to collate key data assets, to the benefit of, frankly, any person or organization that has interest, globally.

The mandatory embedding of LEIs in financial reports is just one demonstration of this technology’s transformative potential. In broader terms, not only is the LEI shoring up the digital financial ecosystem, it is helping to stabilize the evolution of the world’s digital economy. It is no exaggeration to say that the LEI, together with the Global LEI System, solves the problem of trust for legal entities worldwide. It is the only open, commercially neutral, standardized and regulatory endorsed system capable of establishing digitized trust between all legal entitles, everywhere. It was conceived and designed as a public good, and can be deployed without charge in a wide – and growing – variety of digital use-cases. Put simply, the more it is utilized, the more good it will do.

 

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