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EBA Report: Pay attention to cybersecurity and customer education

The European Banking Authority recently released a report in July. In the ‘EBA report on the impact of FinTech on payment institutions’ and E-money institutions’ business models,’  the EBA lists a number of key challenges faced by the payment industry. 

These key challenges include operational resilience and ICT security, operational capacity, regulatory framework, customer education as well as acquiring and retaining talent. In this article, I’d like to take a closer look at two of these challenges and how Alphacomm Solutions is taking them on.

Security

One challenge that stands out in particular, is that of operational resilience and ICT security. Security has always been and will always be a cause for concern. In the realm of eCommerce, fraudsters are quick to adapt their tactics and never stop looking for weaknesses to exploit.

Our lives have moved to the internet and so has our data. Our laptops and smartphones are treasure troves of private information. What complicates matters, is that data is shared with an increasing number of third parties. New regulations like PSD2 also play a part in this development.

The more digitally interconnected our society becomes, the larger the potential consequences of a security breach. The EBA report underscores this fact and foresees an ‘inevitable proliferation of cyber-risk in the payments industry.’

As the share of cashless payment transactions increases, protecting these transactions from prying eyes is becoming an increasingly difficult task.

Alphacomm Payments

Still, online businesses shouldn’t have to bear the risk of fraud. Your payment gateway provider should be confident enough to guarantee all payments. For example, Alphacomm Solutions offers 100% fraud risk takeover. Our SaaS fraud solution includes the automated screening of online transactions, including chargeback protection. It’s also GDPR proof; data is handled properly per EU regulations.

 

Customer education

Another aspect of the EBA report that requires close attention is customer education. The report illustrates a need for more digital and financial literacy among customers. A lack of financial literacy in the digital space can lead to one of two scenarios.

The first scenario is that innovative, forward-thinking, digitally-minded businesses are forced to launch or maintain a physical presence. The other is that less literate consumers end up excluded from participation, as innovators assert the digitally savvy market is large enough to operate in exclusively.

Consumers are not all the same. Businesses should ask themselves if and how they can better inform and educate their consumers as the industry inches forward into a fully digital environment.

Alphacomm Reminders

At Alphacomm, we are aware that not all consumers are equally ‘digital.’ One area in which we see this is payment collection. There are differences in literacy, financial stability, culture and these differences play a role in how a request of payment is handled. Therefore, when it comes to collecting outstanding payments, there’s no such thing as one size fits all.

In 1964, Canadian philosopher and media theorist Marshall McLuhan first coined the phrase, ‘the medium is the message.’ With it, he portends the character of the medium through which content is transmitted is more important than the content itself. It is the medium itself that influences our behaviour. In other words, if the medium is ill-suited to the recipient, the message may be lost.

We have solved this dilemma by developing a payment reminder solution that can be tailored to the preferences of any demographic. From formal letters to WhatsApp chats or complete interactive landing pages that feature multilingual instructional videos and ranging do-it-yourself payment options.

The EBA report

The EBA report is an informative read and goes far beyond the two challenges highlighted in this article. If you feel like tackling the 33-page report over the weekend, visit the European Banking Authority website. To read more about our solutions, visit our payments, top-up and reminders pages.

 

 

About the author

Joep van Doornik – Payment Solutions
Product Owner

I’m Joep van Doornik, Product Owner at Alphacomm. I make sure that our services remain cutting edge.


Related articles
Strong Customer Authentication Alphacomm Solutions

EBA Report: Pay attention to cybersecurity and customer education

The European Banking Authority recently released a report in July. In the ‘EBA report on the impact of FinTech on payment institutions’ and E-money institutions’ business models,’  the EBA lists a number of key challenges faced by the payment industry. 

These key challenges include operational resilience and ICT security, operational capacity, regulatory framework, customer education as well as acquiring and retaining talent. In this article, I’d like to take a closer look at two of these challenges and how Alphacomm Solutions is taking them on.

Security

One challenge that stands out in particular, is that of operational resilience and ICT security. Security has always been and will always be a cause for concern. In the realm of eCommerce, fraudsters are quick to adapt their tactics and never stop looking for weaknesses to exploit.

Our lives have moved to the internet and so has our data. Our laptops and smartphones are treasure troves of private information. What complicates matters, is that data is shared with an increasing number of third parties. New regulations like PSD2 also play a part in this development.

The more digitally interconnected our society becomes, the larger the potential consequences of a security breach. The EBA report underscores this fact and foresees an ‘inevitable proliferation of cyber-risk in the payments industry.’

As the share of cashless payment transactions increases, protecting these transactions from prying eyes is becoming an increasingly difficult task.

Alphacomm Payments

Still, online businesses shouldn’t have to bear the risk of fraud. Your payment gateway provider should be confident enough to guarantee all payments. For example, Alphacomm Solutions offers 100% fraud risk takeover. Our SaaS fraud solution includes the automated screening of online transactions, including chargeback protection. It’s also GDPR proof; data is handled properly per EU regulations.

 

Customer education

Another aspect of the EBA report that requires close attention is customer education. The report illustrates a need for more digital and financial literacy among customers. A lack of financial literacy in the digital space can lead to one of two scenarios.

The first scenario is that innovative, forward-thinking, digitally-minded businesses are forced to launch or maintain a physical presence. The other is that less literate consumers end up excluded from participation, as innovators assert the digitally savvy market is large enough to operate in exclusively.

Consumers are not all the same. Businesses should ask themselves if and how they can better inform and educate their consumers as the industry inches forward into a fully digital environment.

Alphacomm Reminders

At Alphacomm, we are aware that not all consumers are equally ‘digital.’ One area in which we see this is payment collection. There are differences in literacy, financial stability, culture and these differences play a role in how a request of payment is handled. Therefore, when it comes to collecting outstanding payments, there’s no such thing as one size fits all.

In 1964, Canadian philosopher and media theorist Marshall McLuhan first coined the phrase, ‘the medium is the message.’ With it, he portends the character of the medium through which content is transmitted is more important than the content itself. It is the medium itself that influences our behaviour. In other words, if the medium is ill-suited to the recipient, the message may be lost.

We have solved this dilemma by developing a payment reminder solution that can be tailored to the preferences of any demographic. From formal letters to WhatsApp chats or complete interactive landing pages that feature multilingual instructional videos and ranging do-it-yourself payment options.

The EBA report

The EBA report is an informative read and goes far beyond the two challenges highlighted in this article. If you feel like tackling the 33-page report over the weekend, visit the European Banking Authority website. To read more about our solutions, visit our payments, top-up and reminders pages.

 

 

About the author

Joep van Doornik – Payment Solutions
Product Owner

I’m Joep van Doornik, Product Owner at Alphacomm. I make sure that our services remain cutting edge.


Related articles
Strong Customer Authentication Alphacomm Solutions

Cold hard cash: a look at the cashless trend in the United States

The cashless trend is global. But as we wrote in a previous article: the impending cash extinction will one day be upon us, it just won’t happen everywhere all at once. In this article, we look at the state of cash in the United States. 

In 2019, the total transaction value of digital payments in the United States stands at $961.5 million. An annual projected growth rate of 8.6% will propel this figure toward $1.3 billion by 2023. But what effect does this have on the popularity of cash?

Shelle Santana, assistant professor of business administration at Harvard Business School collaborated with financial services provider Square to analyse millions of payment transactions in its database. The conclusions are interesting.

More spending on smaller purchases

In 2017, 30% of all payments in the USA were made in cash. While in 2015, 63.8% of American households had a credit card. In 2017, this number increased to 68.7%. More and more Americans have cards. Just like in other countries (with the exception of China), Americans are also using their cards for smaller and smaller purchases.

A comparison between 2015 and 2019 shows a drop from 46% to 37% in the use of cash for transactions under $20. Santana’s research shows that nowadays, half of Americans would use their cards for low-cost purchases.

Pushback

Overall, using cards instead of cash has many benefits. Among other things, it improves financial accountability, makes the shopping experience much faster and improves safety by limiting the amount of cash on store premises. It’s even healthier to use cards instead of cash.

Still, there has been a fair amount of pushback. Many Americans are of the opinion that modern companies shouldn’t have the right to be cashless. One of the arguments used is that cashless businesses discriminate against the less affluent members of society as they are more likely to be dependent on cash and less likely to have access to cards.

Interestingly, some noteworthy companies that had previously declared themselves cashless, have started accepting cash again. Either due to pressure from customers or as the result of legislative measures.

A prime example (pun intended) is Amazon Go. The super modern cashless (and cashierless) stores launched in December 2016, have recently started accepting cash. To shop at Amazon GO, one needs a smartphone. As it turns out, 23% of Americans who earn $30,000 or less, don’t own one and thus cannot participate in the ecosystem.

In the United States, there are cities and states that have taken measures to make sure citizens can always use their physical legal tender. For example, the state of New Jersey and the city of Philadelphia. Both have passed legislation banning cashless businesses. Similar legislation has been proposed in other cities as well.

The times, they are a changin’

Shelle Santana’s research revealed that 73% of small business owners believe that the United States will never be a fully cashless society and 83% said they would never go cashless.

Still, the times are changing. As digital payments continue to grow in both volume and value, and access to smartphones increases, society will continue to inch towards a cashless existence. As Greek fabulist Aesop (621 BC – 565 BC) hinted in his fable ‘Tortoise and the Hare,’ this is a case where, in the end, slow and steady will inevitably win the race. Similarly, the more we transact in the digital space, the more important the need for safe and secure digital payment systems.

What we must take away from the insights cited in this article is that there is a moral responsibility to make sure all individuals can properly participate in the economy and share in the prosperity that digital payment solutions provide.

 

About the author

Joep van Doornik – Payment Solutions
Product Owner

I’m Joep van Doornik, Product Owner at Alphacomm. I make sure that our services remain cutting edge.


Related articles
Strong Customer Authentication Alphacomm Solutions

Cash is dead, long live digital cash!?

In my previous blog, Cash is king, but for how long?, I discussed the global cashless trend. In a nutshell, recent studies show that consumers are using payment cards more often, for all sorts of purchases. At the same time, in Britain, cash machines were disappearing and along with them, people’s access to cash.

Today, five countries are home to more than fifty per cent of the world’s cash machines. Four of these countries, Brazil, China, Japan and the USA all saw a decline in the past year. While it’s true that all around the world, populations are replacing their cash for cards and access to cash is becoming harder, there’s still a caveat to this trend.


Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light;
-Dylan Thomas – 1914-1953


Will cash go gentle into that good night?

A new RBR study, Global ATM Market and Forecasts to 2024, shows that the number of cash machines around the world fell by 1% (roughly 700,000) in the last year. However, in developing economies and those in transition throughout the Asia-Pacific, Middle East and Latin America, cash machines are actually on the rise. India saw very slow growth in the number of cash machines, but growth nonetheless.

As the decline of cash machines in developed markets continues, so will the growth of cash machines in developing markets. Will this growth continue unabated? No, it will not. Still, in the coming years, this offset will lead to a rather slow decline in cash machines, from 3.24 million in 2018 to 3.22 million in 2024. The impending cash extinction will one day be upon us, but it won’t happen everywhere all at once.

 

 

When the time comes, will cash be missed? Perhaps, for a little while. But going cashless has its benefits. To name a few:

Safety – Cash is dangerous

Safety has always been a concern when it comes to cold hard cash. For many businesses, the less cash on the premises, the better. Especially as contactless payments become the norm, the less time spent on the handling and changing of money will result in faster service and shorter waiting lines for consumers.

Health – Cash is dirty

It’s also a matter of maintaining good hygiene. Did you know flu viruses can live on paper money for up to 17 days? At the London Met, an investigation into the hygiene of money found that cash in circulation contained life-threatening superbugs like MRSA as well as bacteria like Listeria. This is especially a problem for people with weak or weakened immune systems.

Scale – Cards are less messy

Major cities are also taking note. Here in the Netherlands, try paying a bus driver in cash, and she’ll just turn you away. In cities like Rotterdam, the entire public transport system is card-based. Same goes for London, where the Oyster card is your gateway to all transit options. As we speak, the city of Paris is about to launch a card-based payment method for its metro system. Passengers with a Navigo Easy card will be able to recharge their credit with their smartphones, further separating the virtual from the physical world.

Data – Cards are insightful

One of the aspects that few people think about is that card payments are easier to track. Measurements and financial reporting are more accurate when people use cards. Cards tell us a lot more than money spent. Cards tell us who spent it, where and when. Cards allow for predictive analytics that ideally improve the experiences of consumers.

Still, fraud is not going away

Technically, a card is only as valuable as the amount of cash it represents. However, the ‘danger’ of handling cash is also moving into the digital era. As the speed and overall value of transactions increase, so does the speed at which fraudsters operate.

Instead of looking over their shoulders, customers now rely upon you, the business owner or manager, to make sure their transactions are protected in the online environment. So of course, this naturally begs the question: what’s the digital and legal equivalent of a sawed-off shotgun hidden under the counter?

Well, you’d need a system. Ideally, a payment system with a 100% payment guarantee, that detects fraud but also prevents it from happening. A system with seamless integration and advanced business intelligence tools for invaluable insights that give you a competitive advantage.

I think I might know of such a system.

Get in touch with our team for more information on our payment services.

Alphacomm Solutions whitepaper: how automated payment reminder systems boost your credit management performance

Andrew Collins
New Business Development Manager

Latest articles

Strong Customer Authentication Alphacomm Solutions

Cash is king but for how long? Alphacomm Solutions

Cash is king, but for how long?

The latest Global Payment Cards Data and Forecasts report by RBR, released in February 2019, highlights the sharp rise in the acceptance and usage of payment cards. But are merchants ready for a cashless economy?

In 2017, approximately $25.1 trillion worth of purchases were made with payment cards compared to 2016. In this same period, e-commerce card expenditure reached $4.5 trillion; an increase of 13%. According to the study, card expenditure worldwide is expected to be valued at $45.2 trillion by 2023. E-commerce will make up a substantial part of this figure as it is predicted to hit $11 trillion.

Low value payments are becoming more frequent

One explanation for the rise in card expenditure is consumers are increasingly using their cards for low value payments. In recent years, mainstream adoption of cards as methods of payment has been buoyed by improvements in convenience.

One notable exception to the trend is China. Chinese consumers generally reserve cards for high value purchases. Nonetheless, the Asia-Pacific region, with its 28% share in payment volume, is still responsible for 50% of global card expenditure.

Access to cash in a cashless economy?

Consumer attitude is changing when it comes to commerce. In Europe, many businesses and festivals have started to eliminate cash as a payment option. Another development in the payment landscape is the passing of the Payment Services Directive (PSD2) by the European Parliament. The directive provides a much-needed regulatory framework within which European banks and fintech companies can coexist and allows for greater access to alternative banking options.

However, these changes and shifting attitudes have left some wanting. As younger generations do most of their banking online, brick and mortar bank branches have been disappearing across Europe. According to analysis in the UK by Consumers’ Association Which?,  ATMs are disappearing at breakneck pace, especially in rural areas. In 2018, approximately 200 British communities either had poor or no access at all to cash machines. As access to cash becomes a problem, card expenditure will undoubtedly continue to rise. But are merchants ready for the cashless economy?

Securing revenue in the online world

The more we spend online, the more we need to be aware of the pitfalls. As the value of card transactions drops and the frequency of use rises, merchants will increasingly see the need to take measures to protect their business by securing their revenue. Avoiding costly chargebacks and outsmarting fraudsters are among the top challenges for online merchants.

Furthermore, as e-commerce spreads to new markets and international consumer purchases become more prevalent, the need for tools like as SEPA e-mandates and digital payment reminders will only rise. How are you preparing for the cashless economy?

Get in touch with our team for more information on our business solutions.

Alphacomm Solutions whitepaper: how automated payment reminder systems boost your credit management performance

Andrew Collins
New Business Development Manager

Latest articles

Strong Customer Authentication Alphacomm Solutions