Interview with Erika White, Affirm’s Head of Communications and Corporate Marketing

1^st September, 2020

Retailers, fintech and payment specialists are digging deep to understand how each generation of consumers is going about personal finances and overall finance management at this juncture. This is being done in order to evaluate what can trigger a buy, the chosen payment method etc. for various product categories. And considering that the travel industry has been hit hard merchants from this sector too must look at how all of this can play a part in reviving the situation.

The surge in “Buy Now Pay Later” (BNPL) option for transactions has stood out in the recent past, and travel retailers have already responded by activating the same on their digital assets.

Fintech specialists are expanding their operations across the globe, they are coming up with new products, going deeper into the lives of shoppers plus there are indications of consolidation, too.

Ai’s Ritesh Gupta spoke to Erika White, Affirm’s Head of Communications and Corporate Marketing, about consumer spending during the pandemic, evaluating risk associated with installment payments etc.

Ai: Can you explain how the spending habit has evolved in the last year or so, more so during the pandemic? 

Erika White: Consumers are increasingly looking for more flexible, transparent ways to pay that help them manage their finances. A recent study from Ascent found that over a third of U.S. consumers have used a buy now, pay later service like Affirm.

And, our recent report about back to school shopping trends showed that pay over time is growing in popularity among parents -- 78% of the parents aware of pay over time solutions used one to buy at-home school supplies in spring 2020. 

Ai: How does paying via credit card equate with using a debit card or option of installments? 

Erika White: Affirm is a more simple, transparent, and consumer-friendly alternative to credit cards. We provide consumers payment flexibility, without a risk of hidden fees, at the point of sale. Consumers can split the total cost of their purchase, selecting repayment terms such as 3, 6, or 12 months, with interest as low as 0% APR. And Affirm never charges deferred interest or late fees so the number a consumer agrees to upfront never changes. 

Ai: The pandemic has witnessed people losing jobs. How are you evaluating risks associated with people failing to make payments over a period of time?

Erika White: Affirm supports consumers by lending fairly and responsibly. Affirm doesn’t extend loans that we don’t believe can and will be repaid. We're able to do this through our home-grown proprietary credit scoring system that subverts the FICO monopoly and takes a greater quality and quantity of information into account, such as transaction history and credit usage. We use machine learning to make smart, ongoing adjustments to our credit models that enable people to spend in a way that’s responsible and wise. 

Ai: What trends in payments would you like to highlight? 

Erika White: Millennial and Gen Z consumers, having experienced the 2008 financial crisis and seeing credit card debt at an all-time high, are wary of traditional banking services and are opting for flexible payment options. Having grown up with subscription models like Netflix and Rent the Runway, these generations often prefer predictable monthly payments over traditional lines of credit, which can include deferred interest and hidden fees. 

Ai: The travel industry has been hit hard this year. How do you think airlines and travel brands can associate themselves with BNPL or personal finance specialists to propel their recovery plans? 

Erika White: Affirm is a great way for merchants to accelerate growth. Offering Affirm at check out drives overall sales, increasing average order value by 85%. Trusted by 5.6 million customers, Affirm approves on average 20% more customers than its competitors and 67% of its loans are from repeat customers. We’ve helped over 6,000 businesses, including Delta Vacations, Expedia, and Priceline, increase overall sales, reach new customers, and drive customer loyalty. 

Ai: Affirm indicated that consumers have been saving their money during the pandemic and travel is expected to benefit once the consumer is ready to spend the same saved amount. Do you think by being there on personal finance apps, travel merchants can capitalize on the same? 

Erika White: According to a survey conducted by Affirm, 40% of people who cancelled a trip this year, opted to save the money for the same trip in the future.

We believe that just as consumers look for flexibility in making travel plans, they expect the same flexibility in how they pay for those plans. Merchants partnering with Affirm are giving travelers the option to book now and pay over time, while never paying more than what they see up front, so they can feel more confident about their purchase. And by partnering with Affirm, merchants can reach our rapidly growing network of millions of customers.  

Ai: What are your expansion plans? Any specific ones for the travel sector?

Erika White: We’re focused on best serving our customers and merchants in the travel sector and beyond and will continue to explore expanding the number and variety of merchants we serve. 

Explore payment-related trends at the upcoming Airline Travel Payment Summit - ATPS Virtual Conference 2020

Date: 20 - 22 Oct 2020  

http://www.airlineinformation.org/upcoming-events2/607-atps-virtual-conference-2020.html

25th August, 2020 

21^st August, 2020

Trading for stolen loyalty currency, data etc. on the dark web is quite similar to any online marketplace, with options varying from shopping categories to what’s available within various categories to the profile of the fraudster and criminal gang, and lot more.

The modus operandi is quite sophisticated and it is reflected in what and how fraudsters run their respective accounts.

“Fraudsters need to show they do legitimate business, sell authentic data and work on their reputation...even offer the option of refund,” mentioned Tobias Wieloch from Europol (European Cybercrime Centre or 3C), during Loyalty Security Association’s (LSA)  webinar today. The fraudsters also stipulate refund and replacement policy. He added that the majority of attacks rely on existing modus operandi and benefit from known vulnerabilities.

Identification, Attribution and Data Enrichment

Wieloch also explained how the team works on its database, identifiers etc. to work on user matches and user duplication, and identify cybercriminals. Working with the private industry, the team also looks at attribution of losses and evaluates how the data has been fraudulently used, assesses sold compromised credit card or account details, and the financial damage per user. The team also looks at criminals’ details – user name, email address, IP Address + time stamp, login history, device details and phone number.

Wieloch also cited the case of Grant West, a hacker known as Courvoisier, who reportedly stole 78 million usernames and passwords to sell on the dark web with cyber attacks on Uber, Argos etc.

By Ritesh Gupta 

11th Aug, 2020 

A recent report by Checkout.com has indicated that merchants lose “over $20 billion due to false declines”.

While $12.7 billion of this figure goes to another merchant when a customer is turned away, it must to be noticed that false declines “are also making for a less efficient digital economy”. This is because “$7.6 billion of potential spending never came about as the shopper lost interest. 

In the same report, a senior industry executive pointed out that re-visiting risk appetite is vital. Also, a “lot of sins can be hidden in the name of #fraud prevention, because fraud teams aren’t always incentivised to have a very rigorous statistical measure of false positives and false negatives”.

“Many companies just don’t want to get on the MasterCard and Visa chargeback programmes, and that’s the guiding principle. But I think where the real value lies is in getting more intelligent about where you set those lines and being very honest with yourself and very rigorous about what your risk appetite is, and knowing what your actual false positive and false negative rates are when it comes to fraud,” Andrew Row, Managing Director of Uber Payments has been quoted as saying in the report.

Travel sector

Travel ecommerce players are focused on garnering bookings and not going to initially care where a booking is coming from. They also need to better handle the issue of falsedeclines — legitimate orders that get rejected on suspicion of fraud.

It is imperative for airlines and others to evaluate their own fraud model and points of verification and authentication of the payment process.

To curb revenue leakage, travel companies must evaluate distinct behavior and risk, for instance, on each device, rather than applying one set of rules. Ekata asserts that rather than “strictly looking at definitive good or bad, it would be more effective to look at the probability of good or bad, so to adjust to the right tolerance level in letting transactions through”.

In fraud riskmanagement, as PayPal also points, it is vital to source info from a variety of sources, incl. real-time info to check authenticity of transactions.

Priceline, in conjunction with Forter, chose to rely on automated decision-making throughout the entire payment flow to work out an apt routing for a transaction to be approved.

Airline Travel Payment Summit - ATPS Virtual Conference
20 - 21 Oct 2020

https://lnkd.in/dwqsrau

The ATPS Virtual, co-hosted with UATP, is dedicated to the payments and fraudprevention strategies needed for airlines and travel-related businesses to survive.

7th Aug, 2020 

15^th July, 2020

The focus on streamlining payment-related aspects has strengthened over the past few months that mean more optionts to pay, efficient processes, lowering costs etc.

“Considering convenience and flexibility-related requirements and expectations of travelers moving forward a seamless refund process is going to be imperative, especially in the short-term as refunds continue,” highlighted Rachel Morowitz, UATP’s VP, Alternative Form of Payment, during Ai’s ATPS Webinar – Payment Strategy Roundtable.  She also referred to continued innovation in areas such as virtual cards and contactless payments, for example at the airport.

Options such as “buy now, pay later”, too, are gaining traction.

The growth in installment payments has accelerated during the pandemic. The likes of airlines, hotels, OTAs etc. are considering this form of payment to be a key tool in their recovery, said Tom Botts, CCO, Uplift.

The option to pay in installments is a way to support and stimulate demand. The role of a partner like Uplift should be seen from a payment marketing specialist perspective and understanding of conversion, optimizing areas like check-out messaging, auto-updates as ancillaries are added etc., said Botts. In addition to the U. S. and Canada, the company is in the process of expanding operations to Latin America, allowing airlines to extend this payment option.

As for why Uplift stands out, Botts said, “Everything we do designed is to drive business results for our travel partners.”  The offering is optimized for travel conversion. As for the processing, he said that at the time of paying for a transaction, if a customer opts for paying via installments, there is a sub-second credit check, and accordingly options are presented. Uplift settles with no changes to the existing flow, and no impact to payment processing or revenue accounting workflows.

During the webinar, it emerged that 82% of the attendees intend to accept more alternative form of payments (AFPs).  

US-based #paymentech specialist and omni-channel acquirer Citcon’s Seth Friedman shared that the company is in the processing of facilitating 20 mobile wallets over the course of next 12 months. He mentioned that mechants, in addition to letting consumers pay via wallets, should also look at the demand stimulation prowess of an ecosystem like WeChat.

As for processing of payments and looking at efficiency while adding AFPs, airlines must evaluate aspects like integration, reconciliation, automation and global coverage.

By Ritesh Gupta

Follow Ai on LinkedIn: https://www.linkedin.com/company/airline-information/?viewAsMember=true

1st July, 2020 

1st July, 2020 

Travel suppliers and intermediaries are attempting to revitalize their respective businesses, offering discounts and coupons to boost consumption. This means every transaction counts and a risk-averse mindset – i. e. rejecting a transaction than to risk passing a fraudulent one – won’t work, wries Ai's Ritesh Gupta 

25^th June, 2020

A major lesson from the Covid19 pandemic when comes to balancing UX and security is to make the most of available data.

Do away with a mindset that is commonly associated with rule-based systems, which is built with hard rules or buying limit.

“Every transaction counts and fraud rules can’t be too tight,” Microsoft’s Sondra Feinburg told Ai’s Ritesh Gupta in a recent interview.

Some key points:

• Data makes difference. As Braintree asserts, more relevant data facilitates more automated learning that can be applied to risk decision-making.

• Focus on separating a “good customer from a bad customer”. Too much authentication in shopping can upset the shopper. Strike the right balance between payment fraud protection and approval rates.

• Evaluate a multidisciplinary approach that combines big data, predictive analytics and real-time machine learning.

• Ongoing monitoring is essential – Machine learning models need to be trained, tested and re-trained as fraud trends evolve, points out ACI.

• More customers are preferring contactless payments. Work on authentication strategy for a mobile experience.

• Only dealing with rules have a limited scope, as they are reactive and tend to be about fraud to happen basically. Have a layer of adaptive AI in order to learn the patterns.

Follow Ai on LinkedIn: https://www.linkedin.com/company/airline-information/?viewAsMember=true

19th June, 2020