15th August, 2019
It is imperative for travel e-commerce companies to be ready for bots, emulators, malware etc. and be precise with their fraud prevention plan.
As a specialist in behavioral biometrics, SecuredTouch asserts that the days of static biometric techniques are numbered. Rather merchants now need to dwell upon continuous authentication that features device intelligence, behavioral anomalies. All of this becomes even more important as mobile-related fraud is on the rise, and the behaviour of consumers when they shop via mobile and what makes such devices risky needs to be ascertained.
Going deeper into the complexity of the mobile commerce fraud, it needs to be understood that there might be one actor in the whole chain, says Lewis Duker, SecuredTouch. “It could be that one fraudster is testing the credentials, and another one monetizing the credentials,” he says. Referring to the threat of bots, he said the malicious activity needs to be trapped as it is happening.
In this context, the limitations of static fraud detection methodology via CAPTCHAs, blocking known hosting providers and proxy services or static biometrics are coming to the fore.
It all boils to verification of the legitimacy of the user, but considering the usage of today’s devices for shopping and the tricks of fraudsters, merchants need to evolve as well.
Hear from senior executives about mobile commerce fraud at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
12th August, 2019
Ai Editorial: In an era where anything around personal information handling practices is being given a priority, the future plans for Libra are being probed, writes Ai’s Ritesh Gupta
It was in the second quarter of this year when Mark Zuckerberg reportedly mentioned: transferring money online needs to be as simple as sending photos.
Ever since the related news i. e. the launch of Libra has emerged, it has created uproar for sure.
Politicians, regulators, data privacy specialists…the list is a long one, but they all have shared concerns or asked for a deeper probe into the plans behind Libra. For the record, Libra isn’t Facebook's cryptocurrency. It is an initiative of The Libra Association. It is an independent, not-for-profit membership organization, headquartered in Geneva, Switzerland.
For its part, Facebook, a founding member of the Libra Association, also announced the creation of its subsidiary, Calibra, which would participate in the Libra Blockchain.
The association has underlined that its goal is to pave way for a “simple global currency and financial infrastructure that empowers billions of people”.
Libra is made up of three parts that will work together to create a more inclusive financial system:
Room for a new, secure and trusted framework
Highlighting the issues faced by consumers, Libra Association says people with less money pay more for financial services. Hard-earned income is eroded by fees, from remittances and wire costs to overdraft and ATM charges, it adds. The association states that blockchains and cryptocurrencies “have a number of unique properties that can potentially address some of the problems of accessibility and trustworthiness. These include distributed governance, which ensures that no single entity controls the network; open access, which allows anybody with an Internet connection to participate; and security through cryptography, which protects the integrity of funds".
Acknowledging that the current blockchain systems have yet to reach mainstream adoption, it explains that mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange. “Some projects have also aimed to disrupt the existing system and bypass regulation as opposed to innovating on compliance and regulatory fronts to improve the effectiveness of anti-money laundering. We believe that collaborating and innovating with the financial sector, including regulators and experts across a variety of industries, is the only way to ensure that a sustainable, secure and trusted framework underpins this new system. And this approach can deliver a giant leap forward toward a lower-cost, more accessible, more connected global financial system,” it adds.
Facebook is just one partner in this global payments system.
Some of the members that are behind the initial stages include: Mastercard, PayPal, Stripe, Visa, Booking Holdings, eBay, Facebook/ Calibra, Vodafone Group, Anchorage, Bison Trails, Coinbase etc. In addition to these, there are firms (venture capital firms, and non-profit and multilateral organizations, and academic institutions).
Media reports and news clips featuring established media organizations have indicated that the going hasn’t been easy for Libra over the past two months. Questions that have emerged are:
Some of the issues were jointly raised by the representatives of the global community of data protection and privacy enforcement authorities, collectively responsible for promoting the privacy of earlier this month. The list included Information Commissioner United Kingdom, Commissioner of the Federal Trade Commission USA, Privacy Commissioner Canada among the others.
A report by bbc.com has indicated that Facebook “would need to apply for a licence in any country where it wants to offer Libra as a payment tool”. It would be on the company to ensure that there is a provision to “stop money laundering, and the financing of terrorism…”
Hear from senior executives about the blockchain technology at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
1st August, 2019
A report released by the Emerging Payments Association has highlighted that the implementation of Strong Customer Authentication is a cause of concern at this juncture.
The purpose of the new Strong Customer Authentication (SCA) rules is to make online payment more secure and to cut down the risk of fraud. Even as the readiness for the same is being assessed, a report has highlighted that 75% of issuers said they would be ready by the 14th September deadline, from a compliance standpoint, but that they would not be operationally ready. New requirements for authenticating online payments will be introduced in Europe as part of the second Payment Services Directive (PSD2).
The PSD2 Regulatory Technical Standards (RTS) specify these SCA requirements. SCA is based on the use of two or more of the following elements: knowledge (something only the user knows); possession (something only the user possesses); and inherence (something the user is).
The report, released by Emerging Payments Association (EPA) and Chargebacks911, features companies that issue over 107 million cards (comprising 61% of all cards issued in the UK). It is being recommended that more time is required. The enforcement of SCA at this pace is “likely to be extremely high and painful”. Rather, a managed rollout is needed.
Some of the key findings:
In an interview in April with Ai, Laurie Gablehouse, Global Head of Travel Solutions, Ingenico ePayments, did mention that it is a challenging phase for the entire payment ecosystem. Laurie pointed out that the standards are still evolving, with grasp over “80% - 90% of what needs to happen”. “(So) the timing is quite late from a technical perspective for everybody to be ready by September.”
A major development in the recent past featured the European Banking Authority (EBA) as it published an opinion on the elements of SCA and accepted authentication in June. The report acknowledged the same, and shared that considering the recent EBA ruling on compliant SCA elements issuers are required to accelerate their support for biometrics merchants are advised to implement 3DS v2.1 now and then migrate to v2.2 once solutions are fully tested and available.
In its list of recommendations, the report emphasised that 3DS technology must be implemented as a priority. Rather than being bogged down by feeble v1.0 implementations, gear up for v2.2 as early as possible with v2.1 as a practical interim step. A couple of other suggestions:
Hear from senior executives about how the regulatory environment is impacting the world of payments at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
29th July, 2019
Ai Editorial: The role of new technologies in the world of payments can’t be undermined but that’s not enough. In its new analysis, WorldPay has stressed upon the significance of having the right organizational mindset.
Travel merchants can’t afford to slip at a time when a customer is about to pay for their order. All that matters is the way a traveller wishes to pay – their preferred payment method, preferably not letting them fill any details on the device they are using etc.
A Chinese customer is likely to opt for scanning a QR Code and deduction of the final payment from their app, whereas an Indian might opt to pay via Google Pay or Paytm mobile wallet considering the increasing popularity of such options. Facilitating such transactions today is imperative and merchants need to keep pace or even gear up for the future. But it is clear that intricacies of applications and systems within payments continue to rise, mainly owing to use of alternate payment methods such as wallets and mobile commerce. So there is a need to put in a mechanism in place that not only streamlines back office and customer support processes, but also paves way for a smooth addition for any new payment method in the future.
The role of new technologies can’t be undermined but that’s not enough.
In its new analysis, WorldPay has stressed upon the significance of having the right organizational mindset.
This is required for making the most of following technologies:
2. Test-driven infrastructure (TDI) - the developer creates tests before writing code
3. Event-driven architecture (EDA) - a producer-consumer model, where an event producer broadcasts a message that one or more event consumers capture
4. Hypermedia APIs - a sophisticated style of REST API (Representational State Transfer Application Programming Interface) that can simplify client integrations and improve resilience to change.
WorldPay has explained the benefits of these technologies and also what is required internally to leverage them.
For instance, in case when one is focusing on the microservices model to amend and modernize particular services without affecting the rest of the system, it is vital that to have an apt team structure is in place. This model can result in an increment in complexity of day-today tasks, such as operations and security. Organizations have to do away with conventional monolithic-related ways and related control that they are used to for software development. Rather companies have to get ready for an environment that revolves around a sense of ownership and accountability from product engineering teams. The philosophy here is: to garner greater value from software to adopt the fail and learn fast attitude, quicker product cycles based on constant feedback from customers. And, this also means that certain tough questions are asked, for e. g. who owns the data in a microservices architecture—the database team or the application team? Teams must be structured and managed in a way that enables them to own what they’re responsible for, end to end.
WorldPay recommends a vigilant balance of autonomy and collaboration, with ongoing coordination and
monitoring from organizational leads. The study states: This balancing act starts with a shared understanding of some non-negotiable principles that act as a compass for ways of working. It continues with cross-team
discussions about product vision, design standards, and ways to improve, for example. It also means sharing specific decisions, solutions, and components. This requires time and investment but the return on investment is worth it. Ultimately, a smart organization will find ways to delegate as much decision-making as possible to smaller teams. But a truly successful one ensures teams work together coherently so their collective output is greater than the sum of its parts.
Another technology, Hypermedia, in its most basic sense is an extension of hypertext. Explaining the significance of the same, WorldPay points out that Hypermedia simplifies integrations between companies and provides a much more stable service than that offered by other REST APIs. Hypermedia includes images, video, audio, text, and links. In a REST API, it means API manages to operate similarly to a webpage, offering users with direction on what sort of content they can retrieve, or what they can do, as well as the apt links for the same. As MuleSoft explains, the simplest method to take advantage of hypermedia in API is to offer valuable information to direct the user or client to the next possible actions they can take based on the object (whether it be a collection, or item within the resource) or “page” they are on via links.
For mCommerce, hypermedia APIs allow merchants to conduct identity and risk checks with ease.
WorldPay highlighted that today’s mainstream API documentation and design approaches need to focus on their connectedness as a key part of the API and resource design process.
As explained by Kevin O’Shaughnessy, CityHook, during a workshop conducted by Ai in Long Beach, California late last year:
WorldPay recommends that organizations need to design hypermedia APIs with a UX mindset. The study states: We often only think of UX in terms of the consumer experience. However, hypermedia APIs make integrating with complex payment services a simple, stable, and intuitive process for merchant developers. Enhancing the UX for developers has knock-on benefits for customers, including faster access to up-to-date payment services like new APMs. Overall, if APIs are designed with developers in mind from the outset, it’s possible to create a web of functionality that results in a more powerful, more efficient, and more useful service for all.
Hear from senior executives about the role of tech and organizational mindset in optimizing payments at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
19th July, 2019
Ai Editorial: How travellers transact has changed, and merchants can't ignore the role of e-Wallets and bank transfers while deciding on their payment acceptance mix, writes Ai's Ritesh Gupta.
Alternative ways to pay for travel, such as e-Wallets and bank transfers, are being used more often than cards and cash combined, according to a new report released by Amadeus and PPRO. This growth is occurring across the world with e-Wallets now twice as popular as cards in China, accounting for 49% of the country’s $155B digital travel spend.
Merchants like airlines, especially those operating in multiple countries, are looking at alternative payment methods because of several reasons:
In this context, digital wallets have become popular owing to the fact users can avail preloaded credentials and this fastens the online checkout experience. And China has stood out for the usage, since payment is one part of an app. What makes an app like WeChat more compelling than just invisible payments or scanning QR Codes for completing a payment is the fact an ecosystem manages transactions along with ID management and many other aspects holistically.
Companies like Union Pay, Alibaba and Tencent chose to capitalize on the fact that the card usage wasn't as penetrative as one would expect in a populous market like China, so they came up with a payment method that proved to be convenient and ubiquitous. It was available to anyone with a mobile phone or an Internet connection. It was also driven by necessity, since Chinese travellers moving outside their country needed to have an alternative to using a standard credit card. "That is total freedom for the Chinese traveller as they no longer have to rely on cash as their only form of payment while abroad," pointed out Eric Liebman, Global Head of Travel, Ingenico ePayments.
What works in favour of these payment methods is reduced friction. In today's world of instant gratification, as acknowledged by Ingenico ePayments, travellers "demand things now". "...customers want to be able to pay without any friction and with the method they prefer. They don’t want us dictating how they pay, it’s the other way around. That means things like Amazon Alexa, Apple’s Siri, e-wallets or even Uber-like experiences where experience is key, but payments are invisible," mentioned Liebman in a blog post.
Plus, for a merchant, one factor that goes in the favour of this form of payment is seamless convenience and built-in security. Encryption, tokenisation, and device authentication result in additional security.
"Ubiquity is one of the main key takeaways from Chinese companies. Chinese users are at a point where they are using their mobile wallet for anything. Alipay and WeChat Pay are present in online and offline stores alike, in use in China, and outside. It is an ‘all-in-one’ payment transforming solution, showing non-Chinese companies where innovation and an intimate consumer-knowledge can take them," says Rodrigo Sánchez Prandi, VP Product at payments technology specialist dLocal. "Simplicity will go a long way and it will always attract users. If you give your users ease-of-use by adding their preferred payment method, such as paying with one click, one tap, or even one smile, you are a step ahead in today’s payments’ world."
China leading the charge
According to WorldPay, this growth in China along with a surge of adoption in North America will propel eWallets to become the leading eCommerce payment method globally within five years.
With a validated business model, Chinese technology companies are taking their expertise to other markets as well. As indicated by Amadeus' report, Ant Financial, the owner of Alipay, is currently expanding beyond China. The company now has interests in Dana in Indonesia, Asceno in Thailand, Pi Pay in Cambodia, and Mynt in the Philippines, among others. It is expected that in these regions, accelerated transformation in payments will occur as a consequence, stated the report.
Hear from senior executives about eWallets in China and other Asian markets at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
17th July, 2019
Mobile consumption patterns in general remain very exciting in China.
Ecosystems facilitate various daily activities and shopping requirements in a seamless manner. So a user doesn’t easily drop out from an ecosystem. The likes of Tencent and Alibaba continue to make rapid strides. There is plenty to learn from such extreme form of platform economies.
“They (Chinese companies and consumers) aren’t afraid of testing and embracing new concepts,” says Laurie Gablehouse, Global Head of Travel Solutions, Ingenico ePayments.
Indeed, as Laurie pointed out, Chinese consumers are more likely to adapt to technological innovations than travellers or consumers from other countries, say from Europe. China is shaping consumption patterns of global relevance.
The retail shopping/ experience on mobile has moved faster than the counterpart from the travel sector since the delivery of the product is different. “How has that crossed over into travel is still evolving,” said Laurie.
Convenience is clearly standing out as far as trends from China is concerned. It is all about instant gratification. Face recognition is one example of how companies are leveraging existing biometrics and will likely be taking them one step forward, authenticating and facilitating easier, faster, no-device-needed payments.
Hear from senior executives about mobile commerce in China and other Asian markets at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
5th July, 2019
The development around sharing of banking (customer) data and make it available to non-bank third parties via APIs is being followed closely. As pointed by Edgar, Dunn & Company, one main aspect of EU’s landmark payments regulation, PSD2, is ‘access to accounts’ – this is effectively the ‘APIzation’ of bank accounts. Open APIs play a vital part at the heart of PSD2 compliance and open banking.
With open banking, a new financial services ecosystem is set to emerge. Even as issues related to data privacy and security are being raised and discussed, there is no doubt that merchants need to focus on opportunities from their customers’ perspective. Airlines need to make the most of the new regulation, which is resulting in opening up of the payments infrastructure and liberating customer data assets to offer consumers new options and services. “Open banking is one of the key regulatory changes, and it is going to impact the way merchants like airlines accept payments,” mentioned Pascal Burg, Director, Edgar, Dunn & Company (EDC).
Burg recommends that airlines need to “test and learn” about standards and infrastructure, and also application of the same from B2C and B2B perspective.
EDC suggests a three-phase approach for airlines to identify, evaluate and address payment opportunities and threats –
• 360° payments diagnostic/ audit
• Future state/ roadmap
• Roadmap execution - Interim payment team to support business to launch initiatives
By Ritesh Gupta
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1st July, 2019
E-commerce companies, including the ones from the travel sector, are gradually focusing on deploying a multi-disciplinary approach, combining different technologies (including both supervised and unsupervised machine learning) to combat fraud.
Unsupervised models don’t have clearly labelled data, while supervised models do.
As a specialist, Nethone asserts that machine learning today is letting companies deal with fraud. For instance, friendly fraud by helping discover which aspects of customers’ behaviour and transactions designate friendly fraud.
Overall, favourable results come from the ability to experiment with various machine learning-based methods, trying variations on them and testing them with a variety of data sets. It is fascinating to assess how machine learning automates the extraction of known and unknown patterns from data.
Supervised machine learning relies on historical data to predict and prevent further possibilities of fraud based on past fraud. The data set is labelled based on previous observations of fraud, and is described as either fraudulent or genuine. Unsupervised machine learning can be used to learn on the fly and identify fraudulent patterns even without having been trained with historical data, i.e. able to identify unknown fraud attacks.
Rodrigo Camacho, Chief Commercial Officer, Nethone, referred to the role of unsupervised learning in managing friendly fraud and criminal fraud. “(One) looks at the entirety of the dataset (without a label). Then cluster transactions into different bubbles. These clusters are correlated with a type of fraud, for instance, friendly fraud or criminal fraud,” said Camacho. And from here on companies can work on strategies for e-commerce, work on association with key players such as acquirers and issuers etc. for mitigating the risk.
Specialists recommend that merchants should rely on both supervised and unsupervised machine learning to comprehend both the historical patterns of use, as well as identify anomalies.
By Ritesh Gupta
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24th June, 2019
Regulations like PSD2 are paving way for new services and faster payments. PSD2 or the payment services directive in Europe is being associated with a major change in payments and data protection, and it is expected to fundamentally change the value chain.
"PSD2 is opening up the (payment) industry, and breaking the monopoly of certain players on accepting payments," said Simon Eve, Head of Travel, Trustly.
Banks are beginning to expose their data for use by third parties, in particular fintech companies, through open APIs. The use of open APIs to simplify back-and-forth messaging that takes place during the course of a transaction is coming to the fore. Other than authentication, another area to watch out for is improved security. It has to be guaranteed that data is secure, and external services have access only to the controlled data that the consumer has permitted and that the bank has assigned.
Simon, who was in Brighton, UK, for Ai’s ATPS (13th ATPS Worldwide Event), added that the fintech sector is looking at offering instant, real-time bank transfer to airlines.
Simon spoke in detail about the payment-related complexity and how the same is being taken care of when it came to dealing with multiple players, how airlines today are in a position to localize their payment options in a region like Europe, fraud prevention etc.
By Ritesh Gupta
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7th June, 2019
Ai Editorial: CyberSource has highlighted that effective fraud management requires the careful balance of three interdependent dimensions, reports Ai’s Ritesh Gupta
Payment and fraud executives have to be crafty enough to ensure that genuine customers aren’t denied an opportunity to complete a transaction or even face hiccups with added friction. At the same time, merchants can’t afford to be a victim of fraud owing to weak authentication or fraud prevention mechanism.
CyberSource ( https://www.cybersource.com/), in its latest report – the 2019 Global eCommerce Fraud Management Report Asia Pacific Edition, has highlighted that effective fraud management requires the careful balance of three interdependent dimensions –
· Delivering a positive experience for genuine customers and maximising the acceptance of genuine orders - The balancing act, as highlighted by Ai previously, is about being proficient in validating a buyer and such verification shouldn’t interrupt the manner in which they interact and transact with a business. Merchants need to look at new regulations, what sort of action is required and its impact on the user experience, and also the flexibility of consumes when it comes to additional measures that are being taken for authentication. One way to differentiate between transactions is the risk associated with them.
· Accurately detecting and rejecting fraudulent orders to minimise fraud losses - Merchants need to leverage the prowess of data-driven, artificial-intelligence powered offerings for combatting fraud. Rules-based systems are in general reactive and probabilistic solutions, which is why they are unable to prevent fraud before it happens. Rather than using a blanket rule that forces every user to login with 2FA, real-time surveillance can be used to assess logins in the background, and only logins with borderline risks expected to go through 2FA. Merchants should still develop their own fraud tools that are able to tap on their own sources of data for greater efficiency and more accurate detection of fraud.
Real-time machine learning can help against blanket blacklists and whitelists by focusing on the customer’s behaviour instead. It works with real-time live data collected on the merchant’s website, where the system trains itself with each incoming transactions to identify fraud patterns instead. Deploying a multidisciplinary approach combining different technologies - both supervised and unsupervised machine learning - would better equip merchants for fraud management. Unsupervised machine learning can be used to learn on the fly and identify fraudulent patterns even without having been trained with historical data, i.e. able to identify unknown fraud attacks. Thereafter, predictive analytics may still be used to run the probabilities of fraud, giving a risk score.
CyberSource indicated that in particular, enterprise organisations tend to more proactive with their fraud strategies because the financial and reputational ramifications of fraud can be far reaching.
· Efficiently managing the operational costs of fraud management activities – The report also shared that as in other regions, minimising operational costs is generally a lower priority for businesses in Asia Pacific.
The report also highlights that it takes “constant recalibration and fine-tuning of fraud management controls and processes to keep achieving the best balance”.
6 characteristics of the masters of balance, according CyberSource:
1. Have a lower chargeback rate
2. Are more likely to rate ecommerce fraud management as extremely important to their business strategy
3. Find it less challenging to respond to emerging fraud attacks
4. Have a greater range of capabilities that give them agility to respond to the dynamic landscape they operate in
5. Have a greater capability to use data effectively for fraud management
6. Are less likely to conduct manual review, and spend less in this area
Hear from senior executives about the balancing act at the 8th Annual ATPS Asia-Pacific to be held in Penang, Malaysia (27-29 August, 2019).
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