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HOW CAN THE PAYMENTS INDUSTRY PREPARE FOR SCA WITH BIOMETRICS?

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By Vince Graziani, CEO, IDEX Biometrics ASA

 

Significant developments are afoot in the retail and payments industry, with vendors needing to prepare for Strong Customer Authentication (SCA). It’s set to be the most significant change to how people pay for things, not only online but also for card-present retailers across Europe. The deadline for compliance with the regulation has recently been extended again, this time to March 2022.

This is now the third time the deadline for retailer compliance has been pushed back, with the Financial Conduct Authority (FCA) worried vendors are not prepared for the new payment security approach. Which raises the question, will SCA every really take off?  Well, for retailers the extended deadline can be viewed in a positive light. The fact that there are now a further ten months to pilot and then launch their response gives retailers more time to adapt their authentication and verification tools. But it’s also a benefit for banks and payment providers too.

The ongoing delay to the SCA will give the payments industry extra time to prepare for the rollout of the directive so they can deliver a secure SCA payment option to consumers. If the payment ecosystem fails to use this time to prepare or implement the right technology to comply with this new ruling, it will open consumers up to a significant threat of card fraud.

 

Vince Graziani

The challenges faced within the retail space

There has been a large amount of focus on the implications of SCA when shopping online; however, face to face purchases will also need to be revisited. Even when using a card physically, SCA will require two-factor authentication for every purchase made over the contactless limit. This additional layer of protection provides a more stringent authentication process that will help to keep millions of accounts safe from both traditional fraudsters and cybercriminals.

Two-factor authentication means that not only will the user need to provide their details when making a purchase, they’ll also have to confirm their identity with:

  • something they know (a PIN or password),
  • something they have (such as a smartphone),
  • or something they are (biometric face or voice features or a fingerprint).

Once implemented, this will be beneficial in protecting consumers, however, getting to this stage will be a challenge. The requirements are set to cause widespread disruption to the retail space. The introduction of SCA will require in person merchants and card issuers as well as online Payment Service Providers (PSPs), such as PayPal and WorldPay, to have in place the technical enhancements and testing needed by the deadline.

 

Educating the shopping public on SCA

This presents a significant logistical challenge; maintaining effective fraud prevention while keeping an optimised customer experience is not easy. But perhaps the biggest challenge of all is that consumers themselves still aren’t entirely aware of SCA or what will be expected of them come March.

The introduction of SCA demands collaboration within the industry to educate consumers, but ultimately it is up to payment providers to provide a reliable, secure and SCA-approved method of payment to consumers. Providers must also ensure that the method they choose is not only up to standard but is affordable and accessible to all.

 

Preparing for the future of secure payments with biometrics

Biometric payment cards offer the answer for payment providers to help prepare for SCA. Not only will these cards – with inbuilt fingerprint sensors to verify ownership – provide strong customer authentication, but they also come with the added benefit of convenience. Validating your payment with a fingerprint speeds up the transaction process and removes the requirement of PINs or the use of a smartphone.

Biometric fingerprint payment cards offer banks and payment providers, an opportunity to embrace payment innovation that will help them meet these new secure forms of authentication with confidence and ease.

It is worth noting that some payment card manufacturers, such as IDEMIA, are already preparing biometric payment card solutions. These will be ready for banks and card issuers to adopt so they have the time they need to pilot and roll out the new payment method before the new SCA deadline is imposed.

The FCA has also outlined previously that long-term authentication through biometrics and mobile app-based solutions is the future of secure payments. The use of biometric payment cards to authenticate online payments will offer an important way for retailers to balance security measures that comply with the SCA regulation whilst also delivering ease of use for the consumer.

 

Business

DIGITAL TICKETING: THE CHALLENGES AND OPPORTUNITIES FACING PTOS AND PTAS.

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By

Arnaud Depaigne, Product Manager, Smart mobility at Fime.

 

Transport ticketing has rapidly evolved in the digital age. As recently as the 1990s, closed loop systems based around paper tickets or tokens were the norm. This resulted in a poor user experience. Lines to purchase tickets were often long, and turnstile throughput was inefficient. Today, passengers can use a smartcard or even their phone as their ticket, utilizing contactless and Near Field Communication (NFC) functionality to tap-and-go.

This proliferation of digital ticketing has only been further accelerated over the last 18 months. The pandemic has presented Public Transport Operators (PTOs) and Public Transport Authorities (PTAs) with an urgent need for hygienic contactless solutions. As passenger numbers slowly begin to return, the ecosystem is presented with a unique opportunity to advance urban mobility and move towards a Mobility-as-a-Service (MaaS) model. However, with this also comes a series of challenges.

 

Reacting to changing user behavior

Arnaud Depaigne

Today’s consumer world is digital, global and on demand. Passengers want seamless integrated solutions that allow them to plan and pay for their transit using only the device in their pocket. Furthermore, the urban mobility ecosystem is seeing a rising demand for interoperable MaaS solutions that provide end-to-end transportation on a single ticket. Mobile ticketing must deliver on these expectations as well as being user friendly, reliable and secure.

In part, this is being achieved by changing the focal point of urban mobility from the station to the passenger themselves. This consumer-centric approach allows PTOs and PTAs to reconfigure their sales and distribution channels to meet the growing demand for digital solutions.

Mobility providers can achieve this by integrating Host Card Emulation (HCE) and NFC technologies into their ticketing solutions. More technologically literate passengers will already be familiar with digital wallets and contactless payments. This mitigates concerns about achieving widespread user adoption and means that any digital urban mobility solution could be rolled out at speed. Another benefit to this is that it significantly cuts costs for providers. As passengers no longer require mode-specific travel cards, everything is instead accessible on one device. Providers can therefore cut their expenditure on manufacturing the cards themselves. They can also scale back the on-the-ground resources allocated to support issuance.

 

Context is key

When rolling out a solution, providers must be mindful that each individual passenger has different needs. Cities have unique transit networks of varying sizes that require different approaches. Furthermore, any solution must be accessible to all demographics, from digital natives to those who are less technologically adept. They must also remain aware that not every passenger will have a bank account. Solutions must not exclude people. They must offer customers a range of options to make their payment.

Account-based ticketing (ABT) manages the consumer’s funds in the back-office account, making the payment automatically. This gives users flexibility to move between several fare media to make payments depending on what is most convenient at the time – be it by smartcard, mobile device or wearable. To this end, ABT solutions simplify maintenance logistics, improve security while also ultimately reducing the cost of urban mobility.

By moving from a stored value card system to an account-based approach, PTOs and PTAs can achieve “the holy grail of ABT” as it has been described by Visa. This system opens the door for future adjacent services by achieving interoperability between different fare media.

 

The importance of open standards

Open standards can offer a pathway to truly realizing seamless transport ticketing. With open standards, PTOs and PTAs remain in control of their ticketing network as the supply chain remains open to multiple solution providers. Providers can therefore avoid vendor lock-in and the issues that can present. Furthermore, an open standards approach means that PTOs and PTAs can evolve organically with the technology as it is rolled out. This allows them to remain agile and prepared for future challenges and developments.

 

The need for expertise

PTOs and PTAs will need to continue evolving with future technological developments. By remaining aware of the challenges that may lie ahead, they can put themselves in the best possible position to capitalize on opportunities. Infrastructure migration does not necessarily require huge investments, and with the right support, the transition can be made as smooth as possible.

Fime’s global expertise can help demystify and simplify ABT deployment. With over 20+ years of experience ensuring the efficient and successful implementation of card and mobile transaction services. Fime is well-equipped and experienced in supporting the transport market in delivering the next generation of transit ticketing solutions in a complex market.

 

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TRANSACTIONS, DISPUTES & THE POWER OF AUTOMATION

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By

Gabe McGloin, Head of Business Development EMEA at Verifi

 

Everyone wants the transaction to happen

Online payments are evolving toward ensuring every card-not-present (CNP) transaction is a dependable, secure, and seamless experience for the customer. And rightly so, as e-commerce retail sales rose by over 32% in 2020.1 Just to authorise and authenticate a cardholder’s purchase requires data retrieval from many sources, and with all the data matching happening in microseconds, the transaction needs to proceed to completion quickly. It’s understood that for e-commerce transactions, if there is too much friction at checkout, there is a possibility of cart abandonment.

 

Why disputes deserve the same attention

No less vital to ensuring swift online transactions is the right for the customer to dispute a transaction. Disputes are the safeguard that ensures customers can be compensated for fraudulent transactions, damaged goods, or any errors made in transacting. Unfortunately, disputes, and the entire post-transaction experience, have been largely bypassed by automation – until recently.

Gabe McGloin

Customers are making it known when they don’t receive the post-transaction services that they expect. If a customer can’t obtain clarity on a transaction they don’t recall, they’ll might file a dispute. If they return goods and don’t see a refund in a timely manner, they might file a dispute. And, with the increase in e-commerce transactions over recent years1, it has become more apparent than ever that we need to remove dispute friction from the post-transaction environment.

To make a meaningful reduction in disputes will require increased attention to the customer’s post-transaction experience. This means implementing automation and increased data transparency at key points along the dispute life cycle, starting with the first customer inquiry. The antiquated retrieval request which can take 2-6 days is obviously not the answer. When a customer wants to clarify information concerning a transaction, it should be at least as quick and easy as making the initial transaction. This is completely attainable with the right infrastructure in place.

 

Automation, data transparency, and disputes

Say a customer calls their issuer seeking clarity for an unrecognised CNP transaction on their billing statement. Using the transaction identification from the statement, the issuer can request business and receipt-level data directly from the seller’s customer relationship management (CRM) system. This detailed data can cover seller information such as address, phone number, items purchased, purchase date, along with additional transaction data points. This information can be retrieved in near real-time, while the call centre agent is on the phone with the customer. Just to put this in perspective, up to 25% of calls to the issuer are to seek clarity of unrecognised transactions,2 and issuers commonly don’t have the level of detailed information to remedy the situation.

Other reasons for a customer “clarity call” include simple forgetfulness, an unacknowledged purchase from a shared family card, or first-party fraud (disputing a transaction the customer knows is valid). In each case, issuer and seller collaboration can afford the automation and data transparency to quickly and decisively prevent an unwarranted dispute from proceeding. This provides the expected customer experience, as well as the best outcome for the seller and issuer.

Now, consider a customer calls their issuer to file a dispute. Historically, that meant the seller would not even know about the dispute until it was past the point of no return, and well on its way to becoming a chargeback. More recently, through data transparency and issuer and seller collaboration, issuers have been able to alert sellers of a dispute in flight with a 24-hour to 3-day window to issue a credit resolution or allow it to escalate. But these types of solutions still requires the seller to expend hands-on operational time, in case review and credit issuance, should the case warrant it.

Now, with current technology, issuers can process the dispute through a simple, logic-driven decision engine populated with seller-defined rules and parameters. This process can enact a decision, with credit in process, in less than one second – again, all while on the phone with the customer. The outcome is an improved customer experience that also removes the operational time and expense of a manual review or a dispute representment for both the seller and issuer.

 

Keep an eye on customer experience

We are right on the verge of having automation, data transparency, and issuer and seller collaboration align throughout critical points in the payment life cycle, at the point where it’s needed the most – the post-transaction stage. Customer confidence and satisfaction are essential to promote the health of payments, both pre- and post-transaction. These recent developments clearly indicate that it will take a new level of collaboration and innovation to reduce disputes in the post-transaction environment.

Keep these innovations in mind to protect your business – and keep an eye on your customer’s experience, for the benefit of all transaction stakeholders and the entire payments ecosystem.

 

1 US Ecommerce Forecast 2021 – Insider Intelligence, July 2021

2Improving the Dispute Experience – Aite, May 2020

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