- Payment & Fraud Editorials

19^th April, 2019

Ai Editorial: The PSD2 introduces strict security requirements for the initiation and processing of electronic payments, which apply to all payment service providers, writes Ai’s Ritesh Gupta

The impact of PSD2 on e-commerce payments is being probed. This payment services directive in Europe is being associated with a major change in payments and data protection.

Merchants and other stakeholders are evaluating a number of issues. One of the key requirements of PSD2 relates to Strong Customer Authentication (SCA) that will be required on all electronic transactions in the European Union from September this year.

Also a critical area from a consumer’s perspective is how their shopping experience is going to be impacted.

The PSD2 introduces strict security requirements for the initiation and processing of electronic payments, which apply to all payment service providers. Stakeholders are evaluating many areas: What exactly are SCA requirements under PSD2? How are acquirers and PSPs gearing up to respond? How can digital merchants, such as travel e-commerce players, deal with stepped-up authentication requests as a result of SCA? How transaction costs are going to evolve?

Impact on CX

For any merchant it isn’t easy to implement any move that results in friction in shopping. For instance, many fraud prevention methods introduce dilemmas between maximising revenue and minimising fraud – e.g. with more rules, implementation of 2FA or multi-factor authentication fraud rates can be lowered, yet more genuine customers will be blocked; on the other hand, with less rules and lax authentication to maximize revenue, merchants will be more vulnerable to fraud attacks. And now with PSD2, the SCA requirements will result in additional friction to the e-commerce payment process. A major question here is – how to cut down on cart abandonment? “Merchants have to be proactive in understanding implications. For instance, evaluate the efficacy of direct debits – understand the scope of the SCA requirements, in which cases it is needed, and what the associated credit risk is?” recommended a source.

Payment specialists also need to assess scenarios where exemption to SCA is permitted.

SCA will require shoppers to validate themselves with at least two out of the following three methods:

• Something they know  
• Something they possess  
• Something they are  

As explained by Worldpay, there’s no need to go through SCA for:

• Trusted beneficiaries: merchants that are whitelisted by consumers
• Recurring transactions: regular payments of the same amount to the same business
• Low-value transactions: payments less than €30
• Low-risk transactions: payments that have been assessed as low-risk in real-time

CardinalCommerce explains that the SCA requirement “is for transactions between cardholders whose payment cards have been issued in the EEA and merchants located in the EEA. To clarify, if a cardholder with a card issued in the U.S. buys from a merchant located in the EEA, SCA is not required (though an authentication solution is recommended). Conversely, if a cardholder’s payment card has been issued in the EEA and they make a purchase from a U.S. merchant, SCA is not required. These transactions are labeled “one-leg-out” and are out of scope for PSD2-SCA.” Another important aspect – the European Banking Authority “recommends exemptions for payment service providers (PSPs) that adopt risk-based requirements in lieu of strong customer authentication, which ensures the safety of the payment service user’s funds and personal data”.

Another area to assess is 3DSecure 2.0

From the industry’s perspective, 3-D Secure 2.0 will pave way for a real-time, protected, details-sharing channel that merchants can avail to send an unmatched number of transaction attributes that the issuer can use without looking for a static password. Overall, enhanced messaging with additional information for better decisions on authentication. As highlighted by specialists, enabling 3DS 2.0 is way to meet the SCA-related requirements. A payments integration that supports 3DS 2.0 is an industry standard approach to comply with the new EU laws.

The transaction risk analysis could be done in a couple of places: after the credentials have been supplied (to work out whether authentication was sufficient for the payment) or before prompting the user for credentials.

For shoppers, in many cases device information is enough to authenticate without an extra step for the customer. However, some transactions that have higher risk or regulations such as PSD2 require active approval. Specialists like Adyen have indicated that their respective 3D Secure SDKs help companies to set up build these flows and there are three primary types to consider: Passive (The SDK and servers exchange all necessary information in the background. The customer sees nothing); Two-Factor (the user is asked to provide a two-factor authentication code sent via email or SMS); Biometric (an app-switch to an issuing-bank app is facilitated by the SDK. The user can use their fingerprint or face in the issuing bank app).  

As for its implications - 3DS 2.0 has put a lot of pressure on issuers. According to Emailage, the advent of 3-D Secure 2 globally and SCA in the EU will stop online merchants paying for most card frauds. Card issuers will be challenged to authenticate their clients using new transaction data to which they have previously not had access.

Hear from senior executives about PSD2 at the upcoming ATPS (21st Century Customer Experience for Payments & Fraud - Airline & Travel Payments Summit) to be held in London (Brighton), UK  (7-9 May, 2019).

For more information, click here

Follow Ai on Twitter: @Ai_Connects_Us

24^th May, 2019

Merchants, including airlines, need to take a collaborative route to combat fraudulent activities such as financial fraud, account takeovers etc.

Jan-Jaap Kramer, Founder and CEO of FraudGuard highlighted the same during an interaction with Christopher Staab, Managing Partner, Ai Conferences at the 13th edition of Airline & Travel Payments Summit (ATPS) in Brighton, UK, held earlier this month. 

“I believe in collaboration (for fighting fraud) at every level,” said Kramer. He indicated that fraud prevention as a discipline has come a long way, considering that a fraud analyst used to be isolated from other departments within an airline. And now various sectors have realized the significance of jointly fighting fraud since one fraudster can have access to a customer’s credentials. And these can be used across a variety of retail sites or in other ways to commit a fraudulent activity. “So it is imperative for merchants to cooperate and fight in unison,” said Kramer.

No point in just passing the fraud liability to another company or garnering data to enable real-time risk assessment but just for one’s own benefit. Rather wherever organizations can share best practices and even data they shouldn’t restrict and go for a join effort to fight this complex problem. This way merchants would be better aware of live and recent fraud transactions, chargeback monitoring, what to do when fraud is identified etc.

First Published on 16^th January, 2019

Ai Editorial: The role of chatbots, be it for facilitating transactions or servicing during any phase of a traveller’s journey, is being strengthened. Ai’s Ritesh Gupta evaluates the lessons learned.  

Is a chatbot astute enough to serve a traveller?

The overall experience based on interactions with chatbots till last year was mixed. The travel booking funnel is a prolonged one, and one of the areas where chatbots have struggled pertains to understanding the context of the query. A case in point is when an established OTA chose to revive an abandoned shopping cart via a chatbot interface (by sending a link for the same through email). What if a user has already finished a hotel booking, reaches the chatbot interface, asks a question about a local activity in the destination chosen and the chatbot is seemingly unaware of the booking funnel! The OTA failed to deliver the desired experience.

Specialists acknowledge such issues and assert that ongoing improvements are refining the messaging app user experience.  

Today a top-notch airline-run transactional chatbot can understand over 60%-70% of inquiries on Facebook, and analysis is being done to understand the intent.  

Continuous improvement

“The re-botulution is here now,” highlighted Jonathan Newman, Commercial Director at Barcelona-based caravelo, during one of Ai’s conferences in Bangkok, in August last year. The company has worked with approximately 10 airlines for their bots. Airlines are either moving their existing web-chats to bot interfaces or directly launching on messenger. The type of chabots, as specialists point out, are FAQ chatbots, transactional ones, initiating a conversation via a chatbot and keeping a user engaged till a human customer care executive takes over etc.

Chabots turn messaging platforms into a new channel for servicing and retail. “Since (now nearly two years) we first connected airline inventory to messenger platforms and in the last 12 months of our launching, training and iterating airline chatbots, we’ve gotten a much clearer picture of the purpose of bot technology,” mentioned Newman. 

Newman referred to seven key lessons when it came to improving bots:  

·          Be reasonable

·          Make it easy

·          Be helpful

·          Be connected

·          Open your mind

·          Be a team player

·          Expect unexpected

Among the other companies, Ingenico Group this week launched its enhanced messaging bot offering, featuring artificial intelligence (AI) services from IBM.

According to Ingenico, Watson capabilities allow the group’s chatbot to better comprehend users’ requests once shared, “whatever they may be”.

It is being promised that the bot can better interpret nuances in language and phrasing, handling natural variations in the manner in which individuals communicate. As a result, the bot can respond quickly and effectively enabling it to meet each user’s specific needs, in a wide range of different languages. The group asserts that the new AI component will play a part in stepping up the conversion rate. A major aspect is Ingenico’s payment API.  On Ingenico’s chatbot’s payment capability, Gabriel de Montessus, SVP Global Online (Retail BU) for Ingenico Group, said: “This new AI-powered capability enhances user experience and improves conversion significantly. Thanks to IBM Watson AI services, users simply tell the bot their desired purchase and submit payment and delivery information – achieving a truly seamless payment experience for consumers.”

Airlines are digging deep, and keen on expanding capabilities. At the time of the launch of Asian airline Scoot’s transactional chatbot in July last year, the airline indicated that other than supporting a full transaction flow, the plan was also to accept promo codes, assist customers to manage and make changes to their bookings, purchase ancillary products such as preferred seats and travel insurance, make interline bookings involving flights by partner airlines, and accept more payment modes

Companies like caravelo point out that retailing for airlines aren’t only about inventory + seat+ bag anymore. With a broadened catalog, airlines need to rethink the touch-points and engagement methodologies in making that catalog meaningful. The focus needs to be on micro moments of retailing engagement, in the channels where customers are. And considering the penetration of messaging apps, the role of chabots can’t be undermined. But the level of sophistication needs to step up to match the expectations of travellers.

Interesting questions that are being probed from e-commerce perspective include:

·          The role of chatbots in stepping up the mobile conversion rate

·          Role in targeting the second wallet

·          Security of chatbots – what if they get hacked or the sort of attacks that can be carried out with them

Hear from experts about the role of chatbots, their performance and how they are being improved upon at this year’s Airline & Travel Payments Summit (ATPS), scheduled to take place in London (Brighton), UK (7-9 May, 2019).

For more info about ATPS, click here

Follow Ai on Twitter: @Ai_Connects_Us

29^th 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.

Organizational mindset

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:

1. Microservices

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:

• First rule of setting up an API is focus on it internally (organizations can run better with their own APIs. This way they can capitalize on data from their business applications and act on it for particular needs), then limited public API and eventually privileged services.

• API means clear boundaries and ease of reuse.

• APIs should be easy for developers to comprehend. This means designing them with clear uniform resource identifiers and non-complex data structure.

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).

21st October, 2020

Travel merchants are closely evaluating the impact of the pandemic on several counts, and one of the key areas is related to working out a balanced payment strategy.

In order to work out the same, airlines not only must shape up a frictionless booking path for a better conversion rate but also need to evaluate how they can bring the cost of a transaction down, as they attempt to make the most of the situation. The top priority in terms of payment strategy post Covid19, as highlighted by Yuval Ziv, MD – Digital Payments, Nuvei, during the inaugural session of the #ATPS Virtual Conf. 2020, is to protect cash flow, and for the same airlines can focus on attractive non-cash offers.  Referring to findings from a recent study, he said around 44% of those interviewed from the travel industry have indicated the same. Other aspects were as follows: reduce payment costs (25%), garner additional revenue (17%) and protect existing revenue i. e. to prevent fraud (15%).

Edgar, Dunn and Company’s Pascal Burg referred to the significance of payments data analytics and regular discussion with payment partners. 

In the second session, Payment Universe’s Marco Conte mentioned that scammers haven’t spared any opportunity to create havoc. “Internal communication (sharing information between teams) and process improvements are needed,” he said. Plus, Conte also stressed on setting up an apt multi-acquiring set up and learning from the new normal by counting on refund and chargeback available data.

Support immediate recovery

CellPoint Digital’s CEO Kristian Gjerding spoke about the significance of payment orchestration. As for how it supports immediate recovery, the company asserted that such move would allow airlines to quickly add the payment methods customers prefer in each market during the checkout process, reducing cart abandonment and maximizing conversions. On the processing side, payment orchestration reduces the cost per payment transaction by dynamically routing payments to local acquirers to reduce cross-border traffic (and fees). Just a few percentage points improvement on an airline's conversion rate, authorisation rate, chargeback win-rate will make a huge impact on their operating margin. Payment orchestration helps them achieve that, so that's what they should focus on.

From an airline’s persective, Scott DeAngelo, EVP and CMO, Allegiant, mentioned that options like being flexible with payment or paying them in installments is a great way to boost the conversion rate. He said the installment payment offering fitted like a glove considering Allegiant’s strategic focus. As for embracing such payment option, DeAngelo referred to the significance of making travel affordable and accessible, and also the same playing a role in not just selling an airline seat, but also other aspects of travel including a hotel accommodation, car rental etc. So buy now pay later (BNPL) has a role to play in stepping up the average order value, be it via addition of an air ancillary or a non-air ancillary. Uplift’s VP-Commercial, Chris Stacey shared that his company, as specialist in BNPL and being 100%-focused on travel, has been counting on data and focusing on customer-friendly policies to offer a relevant payment product and approving more customers.

Handling chargebacks

In a session about the handling of chargebacks and how to ensure customers don’t end up going to issuers, Monica Eaton-Cardone, COO, Chargebacks911 emphasised that it is imperative to maintain open and honest communication with customers regarding any delays or answering their queries. This can help in strengthening ties with customers, as the company shows the customer that it is aware of the situation. “Setting expectations proactively reduces chargebacks,” said Monica.

“Lack of information results in customers behaving badly,” she said. According to her, refund isn’t the only satisfactory answer.

Congrats Rebound Travel!

Rebound Travel emerged as the winner of Ai’s Lion’s Den Pitching Contest of new and innovative Payments and Fraud Prevention Solutions, held as a part of the conference.

The company won The Best Pitch award (Audience Poll) as well as bagged the Best Product award (Judges' Verdict).

The contest featured great presentations from three companies - Rebound Technologies, SecuredTouch and Pennies.

"What has lacked in the airline industry so far has been an innovative and cooperative approach to manage the refund process during this pandemic, according to Tobias Wessels, Founder at Rebound. The company provides the intelligence so that airlines offer the optimal offer type and value that motivates customers to choose an alternative offer to their refund while keeping the airline's opportunity cost as low as possible.

Stay tuned for Day 2 of #ATPS - https://lnkd.in/dHqfzvZ

By Ritesh Gupta

Ai Team

25^th November, 2019

The significance of hiring the right people as organizations try to curb various forms of e-commerce fraud must not be undermined.

“Diversity (while recruiting people), specialized knowledge/ skills, and training and support (is key to curbing fraud,” said Tina Burgess, Senior Manager of Risk and ePayments, Points.

Ai’s new 2020 conference dates:

http://www.airlineinformation.org/upcoming-events2/370-2020-conference-dates.html

19th June, 2020

15^th May, 2020  

Interview with Chargebacks911's Harlan Hutson

Chargebacks are complex and quite expensive to process. The travel industry needs to prepared for the same.

12^th October, 2020

Travel merchants are evaluating payment preferences in different markets.

The shift in consumers' shopping, eating and payment preferences can also give an indication of the same. A study initiated by PayPal in the U. S. has indicated that online grocery has increased by 4.5X, online retail has increased by 3.2X and online food ordering has increased by 4X.

Other highlights:

• Consumers are cutting back on spending and watching their finances closely. That’s why short-term installment offerings are gaining popularity.  

• It’s digital payments or bust - Seventy percent of #millennials and 71% of #GenZ report #digital #payments impacting their willingness to shop in store, compared to #GenX at 55% and #babyboomers and seniors at 46%.

• Brand trust and loyalty reign supreme - Consumers are starting to place more of an emphasis on shopping directly with brands.

Shoppers have embraced contactless or touch-free transactions.

“The coronavirus has accelerated a trend that was already in progress. The appetite for contactless payments is growing, so airlines can expect to see an increased demand for mobile payments such as Apple Pay and Google Pay. As consumers regain the confidence to travel, they’ll expect airlines to support their payment needs - and travellers in different markets will have different preferences. Meeting those preferences in each region allows airlines to boost conversions and reduce abandoned transactions due to payment friction, or lack of available payment method,”  Stephane Druet, SVP Product and Marketing at CellPoint Digital told Ai in a recent interview.

Join experts and explore new trends in payments and fraud at Ai’s #ATPS Virtual Conf. : 20 - 22 Oct 2020

https://lnkd.in/dHqfzvZ

1st July, 2020