Ai Editorial: Time to shape up new and secure payment experiences in 2019

First Published on 9th January, 2019

Ai Editorial: IATA has completed first Open Banking live transaction this week. There are more developments to watch out for in 2019, writes Ai's Ritesh Gupta

 

Streamlining the payment experience isn't about offering the most convenient option to pay, but also ensuring security around the same. Pressure is mounting on airlines and other merchants in the travel sector. Rather than introducing verification processes that delay the transaction experience, airlines must plan frictionless on-boarding and authentication methods.

2019 is expected to witness progress on this count, as airlines continue to focus on offering a simple and frictionless payment procedure - a seamless check-out, being spot on with the choice and personalisation, and eventually managing payment and settlement of transactions seamlessly.

IATA Pay

This week IATA has completed its first “IATA Pay” ticket purchase transaction in a live test environment. It is a new payment method for travellers when buying a ticket directly from an airline website. IATA has stated that this method is not only worked out for convenience of shoppers, but also to offer a cheaper payment option compared to other alternatives. The association also termed IATA Pay as highly secure, for faster cashflow with instant/near instant payment to the merchant, and a simpler payment process resulting in fewer lost sales. The live test was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines and Emirates.

IATA is also working with Deutsche Bank on a prototype for Europe (excluding the UK), starting with the German market, which is expected to undergo testing in early 2019. Following this, IATA will validate the concept with the intention to expand to other regions, stated the association in a release.

Frictionless + Secure Environment

Among technology trends to watch out for in 2019, one can expect artificial intelligence to play a bigger role in fraud detection and cyber defence, security via biometrics, and the role of chatbots and voice-based digital assistants in shopping.

A couple of areas that are worth following include identity verification and how tokenization is shaping up in order to protect payment data.

Considering the pace with which mobile commerce has shaped up and continues to grow, it is vital for merchants to:

  • Count on mobile device attributes for identity verification. The focus is on leveraging data sources and characteristics such as device, location etc. to verify the authenticity of the user. 
  • Keep a vigil on how fraudsters are crafting new techniques and tools for executing fraud through mobile devices. For instance, the use of app cloners and machine learning techniques to create synthetic device identities. Merchants have to come to grips with threats such as ID Spoofing, Porting etc. to comprehend the threat of mobile fraud.
  • To act on user-related reporting to precisely predict what a user’s next buy will be, and when and how the purchase will be made.

Airlines also need to find ways to understand a shopper's behaviour, including purchase behaviour across specific devices and also enhancing fraud detection.

This is where the use of  tokenization is being followed closely. A token replaces sensitive account information, such as the 16-digit primary account number, with a unique digital identifier.

According to CyberSource, tokenization facilitates new payment capabilities and enables to adapt quickly to changing market requirements. Another important aspect is protecting sensitive payment card data. Visa Token Service helps shoppers to connect their cards to merchants of their choice within banking apps, and also comes into play when a customer opts for a new payment card and it gets updated seamlessly, rather than recurring payments and other card-on-file situations spoiling the payment experience. Also, to enhance the tokenization offering, specialists are looking at cloud support, and the plan is to accelerate the checkout phase and augment the payment experience.

Another area that is going to be crucial for merchants is the significance of latency and response time when it comes to fraud detection. The time taken by a bank to respond to an illegitimate transaction “translates directly to how much financial loss can be prevented”. The response time window or detection needs to happen in mere two seconds. "This means less than two seconds to process an incoming mobile activity, build a behavioral profile, evaluate the transaction for fraud, and determine if an action needs to be taken," as highlighted by Microsoft Azure in one of its blog posts regarding mobile bank fraud.

Lastly, fraud prevention specialists recommend that the time has come for merchants to become smarter. 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.

 

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