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PREDICTIONS 2018


2018 trends: Safer data, faster payments, better experiences


Fundamental shifts in consumer behaviour, the emergence of new technologies and an evolving regulatory landscape means the payments ecosystem is poised for unprecedented transformation in 2018


André Stoorvogel


Director, Product Marketing in the Payments Group at Rambus


T


he demand for safer data, faster payments and better experiences presents great opportunity, but also significant challenges. The way we pay is changing. As shopping habits


evolve, e-commerce and m-commerce methods such as in-app and one-click ordering are becoming increasingly popular. In addition, the exponential growth of the internet of things (IoT) is introducing a wealth of new payment use-cases, such as connected cars.


Issuers and merchants, however, must deliver enhanced and varied payment experiences in an exceptionally challenging security landscape. The success of the EMV® Chip Specifications in securing the physical point-of-sale means increasingly sophisticated criminals have shifted their attention towards the more vulnerable e-commerce and m-commerce channels. In addition, there must now be an assumption that the personally identifiable information of any consumer can be accessed and deployed by fraudsters, following the various massive data breaches over the years.


Safer data for emerging payments


Not only are the challenges greater than ever, so too are the consequences. The average consolidated cost of a breach is $4 million, and this will undoubtedly increase when GDPR comes into force across Europe in 2018, where fines can total up to €20 million or 4% of total annual turnover.


EMV payment tokenisation and the emergence of ‘omnichannel tokenisation’ will be key to addressing these challenges. The technology is already widely used to protect certain in-store payment methods. EMVCo’s updated tokenisation framework, however, extends these benefits to emerging channels including e-commerce, recurring one-click ordering and in-app payments. This is a hugely important step in creating a truly secure payment ecosystem.


As tokens are unique and restricted in their usage to a specific


device, merchant, transaction type or domain, payment tokenisation enables issuers and merchants to react and isolate emerging threats, mitigating fraud across all channels. As payment technologies continue to diversify, this ability to ‘constrain the domain’ will become increasingly important.


Given the clear benefits, EMV payment tokenisation is becoming ubiquitous across issuers and merchants. Mandates are the next logical step and something to look out for in 2018. But as tokenisation use-cases continue to grow, issuing and managing these tokens will become increasingly complex. Specialised Token Service Providers have a critical role to play in simplifying the tokenisation web and helping issuers and merchants stay up to date.


Making faster work better


Account-to-account transactions such as salaries, utility bills and subscriptions can still take several days to clear. Real- time transactions, where funds are transferred in seconds, offer significant flexibility and convenience to both banks and consumers. And with PSD2 on the horizon, the potential use-cases and business models for instant account-based payments will increase exponentially in 2018.


Instant payments, however, do present challenges for banks. Most notably, banks have only milliseconds to assess risk and identify suspicious activity. Perhaps unsurprisingly, previous implementations of faster payments have coincided with spikes in fraud.


As more and more countries look to implement instant payments, mitigating fraud is a key consideration for banks. Again, tokenisation has a hugely important role to play. By tokenising account numbers, banks can reduce the risk and impact of account- based fraud to support the development of a safe and secure instant payments framework.


www.ibsintelligence.com | © IBS Intelligence 2018


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