Connect with us

Business

Securing BNPL Platforms for Merchants

Published

on

By: James Hunt, Payments SME at Feedzai

 

The buy now, pay later (BNPL) market has boomed because it offers consumers flexible payment options. Indeed, merchants also appreciate the BNPL model as it allows them to increase sales and opens new opportunities to sell expensive or high-end products to more customers willing to pay over time. However, consumers and merchants aren’t the only ones falling in love with BNPL platforms; bad actors have become smitten, too. Cybercriminals are taking advantage of BNPL platforms to commit fraud.

The global BNPL market is on track to reach a transaction volume worth roughly $680 billion USD by 2025, according to research. In the UK late last year, it was reported that 17 million people had already used BNPL services. Data also suggests that BNPL is used by 25% of eCommerce customers and available from approximately 20,000 merchants. Recent transactions were valued at £6.4 billion, or 5% of the eCommerce market.

And with increasing household costs, consumers are even turning to BNPL programmes to cover energy costs. As BNPL becomes commonplace, it’s important to understand how platforms are vulnerable to fraud and work to keep them secure.

 

James Hunt

Ways Fraudsters Target BNPL Platforms

Cybercriminals typically rely on two key tactics when setting their sights on BNPL platforms. Firstly, fraudsters use synthetic ID fraud during the BNPL platform account opening stage. They create a fake profile using a combination of real and fictional pieces of information, such as identification documents, addresses, national insurance numbers, and more. After building a synthetic identity, fraudsters then use BNPL to buy goods with someone else’s personal details or payment information. Once they obtain the goods, they’ll simply disappear leaving the customer or the merchant to foot the bill.

And secondly, some criminals play the long game to defraud a BNPL user with account takeover fraud. This involves finding individuals with strong credit ratings who have taken out a BNPL loan. Fraudsters use account takeover (ATO) attacks to assume control of the account and purchase more expensive items using the real customer’s strong history with the BNPL provider.

 

Affects of BNPL Fraud on Merchants

BNPL fraud affects merchants who partner with BNLP providers in two main areas:

Merchant reputation. If a customer is defrauded via a BNPL service offered by the merchant, they are very unlikely to do business with the merchant again. What’s more, the defrauded customer is likely to share their experience with their friends, family members, and followers on social media. This scenario raises serious questions over whether merchants are capable of protecting their customers and their personal information.

Financial repercussions. While most merchants will not have to pick up the cost of chargebacks for fraudulent transactions, they will have to address the issue with their BNPL provider. Many BNPL providers have clauses in their merchant agreements tied to security breaches. This means merchants could find themselves picking up the cost of the fraudulent transaction.

Despite this, BNPL is on track to grow and significantly evolve in the coming years. The market is also seeing a rise in consolidation with some acquirers, payment service providers (PSPs), and even banks purchasing BNPL providers. Meanwhile, some banks have launched their own in-house BNPL services to accommodate customers. These developments indicate the BNPL market is in a very fluid state and poised for more evolution in the coming years.

 

Security Tips

With the ongoing evolution of BNPL platforms, there are several steps that both BNPL platforms and merchants can take to keep their transactions secure.

Monitor for data inconsistencies. This is especially important during the account opening stage. BNPL platforms and merchants should review data from a wide range of sources and make sure the provided information makes sense. For example, is the submitted phone number associated with a different user? Does the provided information match the customer’s credit file? Reviewing the provided data for inconsistencies is a critical step in minimising the effects of synthetic ID fraud.

Consider device behaviour. This can be an especially critical step to reducing the risk of BNPL platforms and merchants being targeted by ATO attacks. Look at the user’s device and the geolocation of where the account is logged into. If this appears abnormal, it is a big red flag. But don’t stop with geolocation. Also consider how users hold and use their devices. For example, are they holding it in portrait position instead of using landscape like they normally do? Are they interacting with their screen in an unusual way? These factors can build a clearer picture of whether the user really is who they claim to be and play a critical role in stopping a potential ATO attack before it reaches the transaction stage.

Understand the consumer’s lifecycle. Of course, the account opening stage is critical to determining a customer’s risk level, but it’s not the final stage. BNPL platforms and merchants should continue to monitor the customer’s risk level throughout the entire span of their relationship. Instead of treating the customer’s risk assessment as a one-and-done or annual task, BNPL platforms and merchants should continue to monitor their customers’ risk level and watch to see how different events change their overall profile.

Know that BNPL platforms are gaining in popularity and therefore, like all payment mechanisms, they will also be targeted by cybercriminals looking to take advantage of security gaps. Regulations will inevitably add new requirements for how these platforms operate; however, there’s no better time than now to get ahead of both fraudsters and regulators by taking these steps now to keep these platforms secure.

Banking

The importance of Customer Experience (CX) for retail banks today

Published

on

By

By James Isaacs, President, Cyara

 

Today’s retail banks face considerable challenges. Open banking initiatives –  that make it easier for customers to switch accounts – and increased competition from emerging fintech brands, are making it harder for them to attract and retain customers. This challenge is particularly acute for traditional banks which are seeking to attract younger people, who are drawn to the range of innovative services offered by digital-first emerging ‘neo’-banks.

To stay competitive, traditional banks must improve the customer experience  they offer account holders. They also must look for more efficient ways of working, so they can service all customers in a consistent way, regardless of which banking channel they use – whether it’s banking online, at a physical bank branch, through a contact centre, using a mobile app, or (most often) using a combination of all these channels.

The challenge of consistency

The argument for an omnichannel strategy is compelling. Fuelled by the pandemic, demand for digital banking services has grown. McKinsey suggests that 71% of European banking clients prefer multi-channel interactions, whilst 25% express a desire for a fully digitally-enabled private banking journey with remote human assistance when needed.

The delivery of such systems, however, is not without its challenges. Embracing omnichannel often means transitioning to a cloud-based infrastructure – away from the legacy on-premise systems prevalent in banks. Even when this hurdle is overcome, delivering banking services through multiple channels requires a significant investment of time and resources. Due to these common barriers, many banking CX projects fail to get off the ground.

James Isaacs

At the other end of the scale, there are the banks who have sought to implement numerous channels to cater for every possible customer demand, with varying degrees of success. The key to the delivery of a stellar CX is consistency – ensuring that every stride a customer takes in their journey is seamless, irrespective of the path or the channel they choose to take. The chance of ensuring a consistent service across all these channels is negatively impacted if organisations attempt to simultaneously deploy services to mobiles, website, in-person channels, messenger, chatbots, contact centres, alongside the adoption of newer open banking services.

Selectiveness is key

Organisations looking to optimise CX through the adoption of an omnichannel strategy are therefore advised to be more selective in their approach – adopting one or two new channels or approaches before expanding their omnichannel offering further.

An ideal starting point for retail banks is to look at automation within the customer journey. When applied correctly, automation can be used to help improve customer service in a way that also delivers efficiency gains.

The power of automation

Automation can have a significant impact on the CX delivered within retail banking, which saves valuable time for the customer and enhances the customer journey. Most customers getting in touch with their banks have fairly routine queries, such as a change of address, so the need to speak to an advisor is often unnecessary.

Automated customer-facing support solutions, such as chatbots, offer a faster way for customers to self-serve and secure the answers that they need to certain problems without having to phone an agent. Chatbots are programmed through a knowledge bank that can easily be updated with new information, enabling customers to source the information they need quickly and easily. Chatbots can also be used to direct customers to an agent if they are unable to resolve the issue.

For those customers who do still need to speak to an agent, there are Interactive Voice Response (IVR) systems, which capture information from a customer when they call into the contact centre. IVRs help customers complete simple tasks themselves and route them automatically to the right department. This directly reduces average call handling time (AHT) for agents and the length of time that a customer is on the phone.

The importance of automated CX testing

Yet, offering omnichannel and automated journeys is not enough to satisfy customers. These journeys must be flawless if they are to deliver a seamless customer experience. Forward-thinking organisations understand that the only way to assure perfect execution is through adopting automated testing that places a spotlight on the omnichannel customer journey from the customer’s perspective.

Automated testing can be enabled by leveraging an intuitive testing solution that develops test cases based on existing customer journeys. Retail banks can use automated testing to track various paths through IVRs, chatbots and then base test scripts on those journeys to ensure their flow or functionality is as it should be. Using this strategy, financial organisations can create thousands of automated test cases that cover the full swathe of customer journeys, shortening testing operations to a fraction of the time of equivalent manual tests.

While automated testing provides easily measurable benefits, certain alerts flagged by automated testing are more critical than others. Distinguishing a true failure that requires immediate action as opposed to failures that can be addressed in time is essential to achieving the true return on investment (ROI) of test automation. In doing so, banks can ensure that the customer journey remains smooth, and the CX delivered remains outstanding.

The path to good CX is paved with automated testing

Delivering omnichannel services for banking is key to satisfying customer demand. However, whether it is the delivery of a chatbot, IVR or an open banking model, retail banks are well advised to stagger the roll-out to ensure the delivery of a consistent service to customers. Automation plays a critical role here – both in the delivery of omnichannel services to customers, but also ensuring its ongoing success through rigorous, frequent and automated testing.

Financial organisations that want to remain frontrunners in the market will stand out against the competition by delivering stellar digital and in-person experiences for customers. To assure high-quality CX, walk in the shoes of your customers, testing their customer journey in each and every scenario to confirm there are no cracks in the road. Of course, there may be bumps along the way, but when those are addressed in a timely manner, retail banks will continue to attract and retain customers for the long haul.

Continue Reading

Business

Why do Traders Need a Managed Service Partner?

Published

on

Jeff Mezger, Vice President of Product Management, Financial Markets, TNS

 

Does your financial institution have the understanding, resources, talent and bandwidth to execute an effective data center strategy in-house? If not, it needs to, as behind every transaction is a labyrinth of algorithms and networking infrastructure technology that converge in one location: the data center.

For most, the answer will be ‘no’. There will not be the resource or skill in-house to keep ahead of the maze of technical and logistical options to execute the fastest and most profitable trades. Trading success requires accessing extremely powerful servers, with the best data lines and connections close to where the trade is physically taking place. Processing close to the source of the input data provides the lowest possible latency between input and response – and speed matters. Milliseconds can mean the loss or gain of millions of dollars.

 

Latency Matters

Low latency is vital for algorithmic trading. Many factors affect latency, especially hardware location and network connections. Trade execution speed is critical in maximizing profit and loss, and a competitive advantage comes from having the best communication links to hardware in the best location.

TNS’ ultra-low latency Layer 1 technology for exchange direct access inside the data center was the first architecture of its kind to be offered and deployed globally and remains the most advanced solution in the market. It eradicates the need for multiple switches by using a simple, single-hop architecture to deliver direct exchange connectivity in as little as 5 to 85 nanoseconds – impressive when you consider that the human eye takes 400 nanoseconds to blink!

So, acknowledging that speed and colocation are vital for executing a trading strategy, what can firms do to underpin trading success? Many will outsource operations to a specialist managed hosting, colocation and connectivity service provider.

 

In-house vs. DIY

A recent independent report Colocation of Financial Markets Trading Infrastructure’, identifies the pros and cons of in-house management (a “DIY” approach) versus a managed service model. The report found that managed service providers offer beneficial value-added services for capital markets clients. Advantages include cost savings, trade efficiency, and simplified access to data and network infrastructure support, enabling trading firms to focus on their core business competencies. Industry analyst firm, Celent, which authored the report, interviewed trading firms and data and trading technology providers and found that the key decision criteria when deciding to engage a managed service provider included:

  • Consultation and expert advice on the ideal configuration of hardware, network connectivity, location, data feeds and network bandwidth.
  • Agility and flexibility to take advantage of ever-changing investment opportunities by rapidly and easily deploying trading strategies in new markets.
  • Access to high-end network services, leveraging high-speed solutions, including ultra-low latency, in-data center Layer 1 connectivity to link to trading venues, new customers and other service providers.
  • Operational efficiency and future proofing, with access to the latest technology, and highly experienced staff in all global jurisdictions who help to navigate cultural, linguistic, and regulatory obstacles.

 

Challenges

Managed Service Providers offering remote data center space and connectivity are on a quest to deliver a uniform global experience to ensure trading in, for example, Singapore or Tokyo is the same as trading in London or New York. They are also constantly investing in technology and new locations. For TNS, this means responding to customer requests to deliver a service in any location, most recently announcing a managed hosting and colocation offering in Madrid.

On rare occasions, perhaps instigated by political or economic events, firms may need to move from their existing data center location, as seen recently when key exchange, Euronext, relocated its primary data center and related colocation services from Basildon in the UK to the Aruba Global data center IT3 in Bergamo Italy. Such a physical move is a big undertaking and firms need differentiated support and solutions to ensure that they can seamlessly move and trade continuously, regardless of their size, requirements and the exchange location.

So far, TNS has moved nearly 20 existing and new customers to Bergamo, providing traders with uninterrupted, seamless trading. Our customers have been able to focus on their core business while we have managed the global supply chain issues to ensure a smooth migration. With suppliers quoting lead times of a year for some equipment, our buying power compared to smaller firms or those attempting to DIY a move, has proved invaluable in ensuring a smooth transition.

 

Future-Proof

Firms need to future-proof their trading infrastructure by working with a provider that has experience in managing access to vast amounts of raw market data, can support multicast requirements and is able to offer scalable solutions to accommodate the demands of ever-expanding bandwidth. As traders diversify their portfolios, their market data needs can place excessive network capacity pressures on their infrastructure, sometimes running into tens of gigabits. Seek a provider that can easily accommodate these requirements and handle data bursts during high activity periods, such as those seen on many recent occasions due to market volatility caused by political and economic events.

 

 

 

 

 

 

 

 

Continue Reading

Magazine

Trending

Finance10 hours ago

Hey, Gen Y and Gen Z do you think you can retire comfortably?

By Penelope Gregoriou, technical investment specialist at Alexforbes   Millions of South Africans rely on the money saved in their...

Uncategorized10 hours ago

GDPR: data security four years on

Bruce Penson, the managing director of cyber security and IT support company Pro Drive IT, outlines how GDPR has changed...

Banking10 hours ago

The importance of Customer Experience (CX) for retail banks today

By James Isaacs, President, Cyara   Today’s retail banks face considerable challenges. Open banking initiatives –  that make it easier...

Finance11 hours ago

Getting ready for VAT digitisation: automation is key

Christiaan Van Der Valk, Vice President for Strategy and Regulatory at Sovos, says technology will power real strategic success for...

Banking11 hours ago

Challenging the challenger: Why the digital transformation of traditional banking is key for competing with challenger banks

By Sam Schofield, Senior Vice President: Global Enterprise at Udacity   Monzo and Revolut are only seven years old. Starling,...

Wealth Management11 hours ago

Green with Envy – an Environmentally Conscious Data Center

Mark Fenton, Product Manager, Future Facilities   Environmental considerations are at the top of every business leader’s agenda and an...

Technology11 hours ago

How Digital Adoption Platforms can enhance digital transformation and customer experience in the insurance industry

By Vara Kumar, CPTO & Co-founder, Whatfix   Like many industries, the insurance sector was prematurely hastened towards digitalisation due...

Business20 hours ago

Why do Traders Need a Managed Service Partner?

Jeff Mezger, Vice President of Product Management, Financial Markets, TNS   Does your financial institution have the understanding, resources, talent...

Business20 hours ago

The FCA will take immediate action on customer vulnerability; here’s how firms can prepare.

Author: Jonathan Barrett, CEO and Co-Founder at Comentis   Identifying and supporting vulnerable clients has become a priority for financial...

The Green Revolution In Investing - Sustainable Investing The Green Revolution In Investing - Sustainable Investing
Business1 day ago

How fintech is key to empowering climate action

Attributed to: Rory Spurway, CEO & Founder of CarbonPay   As human activity continues to have a significant impact on...

News2 days ago

Fractional NFTs- A Positive Impact on the Market

Non-Fungible Tokens (NFTs) have been making headlines for quite some time now. The phenomenon is getting a lot of attention...

Technology2 days ago

Are cyber insurance and incident response budgets the same thing?

Dominic Trott, head of strategy – UK, Orange Cyberdefense   Cyberattacks on businesses increased by 13% in 2021 compared to...

Business2 days ago

Ticketing modernization: the key success factors for an outstanding deployment

Arnaud Depaigne, Product Manager, Smart mobility, Fime   Technology has transformed the way we pay, and transport ticketing has been...

Finance2 days ago

How to increase the growth of crypto apps in a challenging market environment

By Alexandre Pham, Vice President, EMEA at Adjust   Crypto and digital assets became one of the hottest tech topics...

Business3 days ago

Businesses must adapt to meet customers’ evolving payment needs

Nathan Shinn, Founder and Chief Strategy Officer, BillingPlatform   From the lingering impact of the COVID-19 pandemic, through to the...

Banking4 days ago

Carbon Neutral and Net Zero: The New Disrupter-in-Chief

Authored by Jason Matteson, Director of Product Strategy, Iceotope   When we think of market disruptors we typically think of...

Business4 days ago

Balancing risk management with a seamless customer experience

By Andrew Davies, VP, Global Market Strategy, Financial Crime Risk Management, Fiserv   For quite some time, measures to mitigate...

Business4 days ago

The need for blockchain to be interoperable and why it matters

By Kai Waehner, Field CTO and Global Technology Advisor at Confluent   In mid-2022, it would be fair to say that...

Interviews4 days ago

How MFA can protect the financial sector from the unprotectable

The financial sector has long been a primary target for threat actors. However, the unique infrastructure of core financial systems...

Business5 days ago

Why a three-step framework can help financial advisers support their most vulnerable customers.

Author: Tim Farmer, Co-founder and Clinical Director at Comentis   We are witnessing a vulnerability epidemic. With the Financial Conduct...

Trending