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THE KEY TRENDS IN PAYMENT AUTHENTICATION

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By Stephanie El Rhomri, VP Testing Services, Fime

 

Across both in-person and online payments, consumer demands have significantly increased. Easy, interconnected payment solutions are now expected, leaving merchants constantly looking for ways to provide a seamless checkout experience and increase revenues. One difficulty that merchants face is that cart abandonment is extremely high, with over two thirds of purchases cancelled before checkout. Some of these purchases are not completed due to frustration caused by the long or complex checkout process.

What’s more, merchants need to adapt to changing consumer needs, which have altered dramatically over the course of the pandemic. The volume of e-commerce transactions increased by 33.6% over the course of 2020, and this trend looks set to outlast the pandemic. However, where money goes, fraudsters follow, with instances of fraud increasing by a fifth over the past year. This highlights that merchants need to balance security with convenience to ensure that transactions are safe and easy to make both in-store and online.

 

Biometrics – you are your password

One authentication method that continues to grow is biometrics. A user’s face, iris, fingerprint or even voice can be used to authenticate a payment. Users have become more familiar with this technology in recent years, as it has overtaken PIN authentication to secure access to mobile devices. We are now seeing this success transfer to payment authentication.

Stephanie El Rhomri

One example of its success is the huge increase in the use of mobile wallets such as Google Pay and Apple Pay. This technology allows consumers to use their face or fingerprint to authenticate a payment on their mobile device for an in-store or remote payment. When using this payment method in store, users can ‘tap into’ both the hygiene and convenience benefits of contactless while feeling confident about the security of their transaction.

Another use case that combines the ease of contactless with the security of biometrics is payment cards with fingerprint sensors. These cards allow consumers to tap and pay without having to worry about contactless spending limits. The security of these cards far exceeds that of traditional contactless cards, while also having the potential to be linked to loyalty schemes, increasing the likelihood of repeat purchases. With the significant growth of contactless payments in recent years leading to even more banks trialing this technology, we can expect to see an increased uptake of this.

 

EMV® 3DS – Secure and seamless

EMV®* 3-D Secure (EMV 3DS) is another technology that is gaining traction globally. It takes the form of a messaging protocol, which is used to identify and verify cardholders for card-not-present transactions with data.

To confirm that the consumer making the purchase is the actual cardholder, the merchant sends data about the transaction, payment method and device information to the issuer. The issuer then reviews the data, performs the type of authentication needed and processes the transaction.

This process results in increased transaction approval rates, reduced fraud and a better user experience. Globally, EMV 3DS transactions have grown by 79% over the past 18 months. And, with the specification constantly being updated to meet evolving industry requirements, we can expect that adoption to continue. For example, EMVCo recently released guidelines on the EMV 3DS user interface (UI) and user experience (UX) design to help card issuers, merchants and solution providers to take a consistent, familiar and efficient approach. This instils consumer trust in the authentication process and optimizes the checkout experience. EMVCo has also recently published the EMV 3DS Payment Token Message Extension. This assists card issuers and merchants in improving the authentication experience for online shoppers when EMV Payment Tokens are in use, further enhancing the fraud-prevention benefits that EMV 3DS provides.

 

A changing landscape

This growth of both EMV 3DS and biometric authentication can be attributed to more than just the requirement for secure and seamless shopping experiences throughout the pandemic. Regulation also plays a part. Payments stakeholders in Europe must now ensure that they are compliant with Strong Customer Authentication (SCA) as part of the European Union’s Payment Services Directive 2 (PSD2). SCA is a mandate that requires payments authentications to use two or more elements of the following:

  • Knowledge – something the user knows (e.g., a password).
  • Possession – something the user has (e.g., a smartphone).
  • Inherence – something the user is (e.g., a biometric authenticator such as a fingerprint).

Payments that don’t meet these requirements will be rejected, meaning that stakeholders must build additional layers of authentication into their checkout flows. But with specifications to adhere to, regulations to navigate and technical complexities to consider, it can be hard to know where to start.

It is also worth noting that no authentication technology itself is a ‘silver bullet’. There are multiple considerations to be made to ensure that an effective online transaction risk assessment process is in place. A consultant with a broader view of the payments ecosystem can ensure the bigger picture is taken into account from the start of projects.

Fime’s long history supporting the industry’s digital transformation and long-standing participation in technical associations such as EMVCo, FIDO Alliance and W3C enable us to deliver unrivalled expert support for your projects.

 

Business

How to Build Your Credit Up Safely

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by Taylor McKnight, Author for Compare Credit

 

What Is Credit?
Credit is money owed by a person that allows them to pay off debts at a lower interest rate. Most banks use your credit score to determine how much they should lend you. Any business loan or mortgage requires that you have a good credit history. However, if someone has poor credit(www.comparecredit.com/credit-cards/credit-range/poor/), they may struggle to pay back these loans, resulting in higher interest payments, making it more difficult than ever to repay the debt. Lenders are aware of this issue and keep a close eye on your credit rating to ensure that no negative information gets reported. This could prevent you from getting another loan in the future. It is important to note that having a bad credit score does not mean you have had a bankruptcy or other kinds of defaults. Many people often face this problem because of unpaid bills or late payment fees. However, this does not mean that you cannot repair your credit – it simply means that all parties involved must work together to solve the problem.

How to build your credit safely
Building your credit score is a major concern for most people, especially if they plan to purchase something as big as a home or car. A good credit score will help one get better rates in the future and make it easier to finance their next venture. Here are some things you should know to improve your credit to be used for the best possible purposes.

1. Keep paying down your balances every month: One of the biggest mistakes that could hurt your credit score is not paying your balance down each month. People who don’t pay their credit card down within the agreed-upon time typically have high-interest rates and expensive monthly costs.

2. Pay your bills on time: The same goes for making payments on a bill. Not paying it within the specified timeframe will result in negative information being added to your report, further lowering your credit score. Ensure that your bank statements are accurate and that all accounts are up to date.

3. Become an authorized user: Some companies will allow customers to become authorized users after meeting certain requirements. Take a look at the terms and conditions before applying for this option. These programs usually give access to one particular service, such as checking or ATM transactions, but are helpful when you need additional coverage.

4. Set up automatic credit card payments: There are several ways to set up auto payment options on your credit cards, including sending them directly to your checking account via email or the phone. In addition, you may want to consider enrolling in online banking services that automatically make payments from your checking account into your credit card accounts.

Other tips when it comes to credit
1. Learn how to manage debt responsibly. This is true for both personal and business debts. Many people tend to spend more than they earn, especially during rapid growth and expansion. If you find yourself facing difficult circumstances, you can seek assistance by talking to friends and family members, getting professional advice, or using online budgeting tools.

2. Don’t skip any repayments. This rule applies specifically to late payments. You need to continue making regular payments, even if you’re behind by a few days or weeks. Once you miss a payment, you’ll start accumulating late payments that negatively impact your score.

3. Try consolidating your loans. Consolidation involves combining multiple small loans from various sources into one large loan, thereby lowering the total interest cost of the loan and reducing the risk associated with it.

4. Be wise with your credit report. One huge mistake most people make is neglecting to pay their bills on time or paying only the minimum due balance each month. As a result, bad information remains on their reports, impacting their scores. All outstanding balances must be paid off completely. Otherwise, negative items that remain on your report can keep you from achieving the best borrowing potential.

5. Get your questions answered. If you have any questions regarding your credit, ask for answers now rather than waiting until you’re experiencing trouble. With a little research, you should be able to learn enough to begin repairing your damaged credit report.

What to look out for that can harm your credit
1. Not checking your credit report: Most people use their credit cards frequently but fail to check their credit reports periodically. Checking at least every 12 months can give you valuable insight into whether or not there are errors on your credit.

2. Paying your bills late: Late payments can lead to hard inquiries affecting your score, which means it appears that you’ve applied for more credit elsewhere. Make sure you never miss a bill.

3 You Close Old or Inactive Credit Cards: If your close old cards, they may show up on your credit report for some time. Closing accounts can impact your score by causing “hard inquiries” that appear on your credit report. Before closing them, look for inactive or closed card accounts on your credit report.

4. You Have Negative Records: Many people think they’re protected because they haven’t had past credit problems. However, many factors may cause a “bad” rating to linger. A single application for a credit product with a low limit may count towards a negative review.

5. There Are Errors on Your Report: Mistakes such as missing debt or inflated balances can damage your credit report. Find out how much money you owe and what types of products you purchased, then try to dispute those entries on your credit report. Ensure you correct any information that needs to be corrected. Failing to do so could hurt your chances of getting approved for future credit.

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Banking

2022 ESG Investment Trends

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Jay Mukhey, Senior Director, ESG at Finastra

 

Environmental, Social and Governance (ESG) themes have been front and center throughout the pandemic. While the framework has been surging in popularity for several years, COVID-19 served as a period of reflection causing many companies, investors and other individuals to take these factors seriously. It’s something that we can no longer afford to ignore.

Jay Mukhey

We are witnessing drought, adverse weather patterns, hotter climates, and wildfires with more regularity, raising the profile of the climate crisis. Efforts were renewed at COP26 in Glasgow last November to help address the challenge, with the signing of the Glasgow Climate Pact and agreement of the Paris Rulebook. As a result, we are now seeing record net new inflows into ESG investing and impact.

 

Evaluating ESG criteria

Long gone are the days when ESG issues were at the periphery of a company’s operations. In just a few short years, ESG criteria have become a key metric for investors to evaluate businesses they are considering investing in.

Investor money has poured into funds that consider environmental, social and governance issues. Data from the US SIF Forum for Sustainable and Responsible Investment shows that ESG funds under management have now reached more than $16.6 trillion. It’s not just institutional investors who are embracing ESG, with Bloomberg Intelligence predicting that savers across the world will amass £30.2 trillion in ESG funds by the end of the year.

Due to the multitude of divergent factors that contribute to a company’s success on ESG, it can be tricky to pin down exactly what criteria to measure. Depending on the industry a company operates within, environmental criteria could include everything from energy usage, the disposal of waste and even the treatment of animals.

Social criteria are primarily related to how a company conducts itself in business relationships and with stakeholders. For example, does it treat suppliers fairly? Is the local community considered when the business makes decisions that would impact them? Do they have a statement and policy around modern slavery?

While governance criteria have traditionally been an afterthought, this may be changing. Everything from executive pay to shareholder rights and internal controls are relevant to investors within these criteria.

 

Tracking ESG for competitive advantage

Many experts within the financial services industry point to the power of ESG as a major competitive advantage, if used correctly. It has been noted that increasingly corporations, from big Fortune 500 companies down to small scale-ups, will communicate on their sustainability metrics to grow their business and to attract talent. However, it’s no longer enough to just pay lip service to ESG issues, with abstract commitments increasingly being seen as insufficient. Companies must now quickly progress to concrete objectives that can be measured and tracked.

A wide range of data providers now offer detailed information and tools that can measure ESG performance and effectiveness. Yet major challenges remain around bringing together what is often extremely fragmented data and transforming it into actionable insights.

 

Focus areas for 2022

The ESG criteria that investors measure is by no means stagnant. Complex societal challenges regularly emerge that require the attention of companies. Contributors recognize several topics that demand a sophisticated approach, including the COVID pandemic, diversity challenges and powerful social movements.

Companies operating within the financial services sector face several specific challenges related to ESG, with contributors believing that fintech will also continue to play a central role in finding answers to them.
For example, industry experts expect customers to be more demanding of firms in SME lending when it comes to understanding exactly what impact they are having on the climate. For many financial services firms, 2022 will be the year that they will try to reduce the time it takes to bring ESG products and services to market, such as green loans and mortgages, as well as checking accounts with sustainability and carbon tracking capabilities.

When selecting a service provider, customers are increasingly interested in the ESG credentials of their bank or financial institution. Research from PwC finds that 80% of consumers are more likely to buy from a company that stands up for environmental and governance issues. Consumers are one of the main drivers of ESG and many are putting their money where their mouth is. It’s a trend that’s not going away; financial institutions need to start implementing their strategy for ESG now.

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