Fulfilling the fourth revolution: 5 need-to-knows from Asia-Pacific security experts
The switch to data is the next revolution in the payments landscape – and security is vital to ensure that change happens smoothly. At the 2019 Asia Pacific Visa Security Summit, held in Shanghai, over 600 delegates from 29 countries explored developments in the security landscape and shared their views and experiences on this dynamic area of the market.
Here are 5 takeaways:
1. The Fourth Revolution in payments needs greater data security to achieve its full potential
The immense promise of data to transform the way we pay – making payments seamless, instantaneous and creating new business opportunities – is clear. The era of data marks the fourth revolution in payments after analogue, magnetic stripe, chip & pin, and tokenisation, and enables merchants to tailor products and experiences for consumers like never before.
Yet for every transformative change, problems must be resolved to achieve full promise. With data and payments, there are two issues which must be resolved: technical challenges and consumer trust.
The key technical challenge involves bringing together unstructured data and converting it into a usable, fairly priced and shareable format. Addressing consumer trust is more difficult still, particularly given how many people have already been targeted by increasingly sophisticated cyber-attacks.
We, as a payments ecosystem, need to educate and empower consumers, to make them aware that every acceptance point is a point of vulnerability and protect them on their behalf – devaluing and encrypting data, and introducing stronger authentication methods that don't use sensitive information.
At the same time, we can deploy data to solve fraud trends. Right now, we can use data to analyse over 500 attributes of each transaction and enable clients to analyse how risky a payment may be.
2. We cannot underestimate the impact of demographic and economic change on which services will be in demand and how people will pay for them
In the three years between 2019 and 2022, we will likely see the epoch-defining displacement of the US as the world’s biggest economy by China, according to Glenn Maguire, Principal Asia-Pacific Economist at Visa. In another 10-15 years, India will have pushed the US further down the global pecking order into third place, according to economists from HSBC and Standard Chartered.1
Given this, the world’s largest cities will predominantly be in the East. More than 50% of households and more than 50% of the middle class will live in cities, and given the sheer size of population and the space urbanisation requires, the Asian city of the future may even be a continuous urban conglomeration that runs throughout Asia.
The way the consumer and the economy look before and after these shifts may therefore be fundamentally different.
Digital connectivity, and the fact we could see the deployment of 5G at scale in Asia first, could see a leapfrogging of tech convergence into a digital ecosystem. We’ll see a continent that transacts and develops online. This emergent middle class won’t use desktops for the internet – they’ll go straight to tablets and mobiles, meaning that ever more data will be available about them.
There will also be a fundamental shift in the nature of ownership. If every one of the estimated 1 billion new middle class consumers in India, China and Indonesia purchased a new car, there wouldn’t be enough space for them to park – so they will likely find an answer in ridesharing instead. And as these consumers emerge, they will require new, secure methods of payment for the products and services they seek.
3. The emergence of the gig economy means fraud prevention measures will have to be very different from the past
The gig economy, and its typically more complex company structures, bring new challenges for everyone connected with payments. We must be a step ahead when it comes to payment security, or risk losing both the customers and workers in this important new part of the economy. Multiple payments methods and multiple channels are needed, and our risk management has to go hand in hand with seamless customer experience. Harnessing data to make a positive contribution to end-user safety and protect merchants is key.
Take the example of food delivery, a clearly time-sensitive business where friction must be non-existent. This has become like kindergarten for fraudsters – where they test their skills through fraud scenarios like card testing or account takeover – before they move on to more sophisticated fraud.
There is a clear opportunity to enhance our use of machine learning to track fraud patterns in real time across geographies, or data collection and biometric indicators. Active authentication should be used only when necessary, as in this convenience-driven economy, consumers don’t want to go through a full authentication process each time they order.
For gig economy operators and users, convenience, speed and security are key – and payments providers need to keep this front of mind when developing their security solutions.
4. Risk-based authentication is the answer to striking the balance between security and convenience
Much of the payments industry is focused on authentication improvement – a concern globally, but one that is particularly acute in Europe given the introduction of SCA (Strong Customer Authentication).
It used to be that customers were more wary of merchants and banks, but this relationship has inverted. Now, it’s the merchants and banks who are increasingly on high alert – requiring stricter authentication to show that the consumer is who they say they are.
At the same time, a merchant’s priority is to convert people visiting their site into business – which often requires seamless authentication.
This is why effective authentication relies on Risk Based Authentication (RBA) – allowing it to take place, as much as possible, in the background.
To enable this, issuers, acquirers and merchants should continue to leverage 3DS 2.0 technology, and specifically the 3DS 2.2 update, the next generation of authentication data connection which allows for more accurate authentication of customers without slowing down commerce. Rather than just “sell and forget”, they have to build out ongoing monitoring of performance, and provide informative decline codes so that merchants can safely manage the wealth of data they have on customers and their experience.
5. Collaboration is key to achieving the security we all need
Frankly, without trust, there would be no payments industry. It’s in our collective interest in the payments industry to make security our top priority and take a collaborative approach to solving problems. After all, fraudsters have no issue collaborating with their peers on the best way to deceive us, consumers and merchants.
While there has been a welcome decline in fraud over time, the battle is continuous – particularly given the shift from card-present to card-not-present payments.
We know that collaboration around standards and data is vital to make sure business is fast and secure. And we need to ensure we follow the same standards and work together to devalue data so that it’s no longer useful to criminals.
Working together with law enforcement is also key, so we can identify the emerging risks for consumers in the gig economy and elsewhere.
Fraudsters are counting on the fact that we won’t collaborate and we won’t cooperate internationally. When we do collaborate and cooperate, we win every time.
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