What’s the power of open data in enabling the future of payments?
How long is a piece of string? That’s the phrase that comes to mind when someone asks me about the ways that data can create more value in today’s economy.
From checking out a holiday destination virtually before you buy it, to making faster, more secure payments with a tap, click or even just a smile! The possibilities of data to transform the way we live our lives are endless. And from speaking to people across the ecosystem, I would say that harnessing this information in a way that delivers real value is an area where there’s never been more demand for support or solutions.
So, let me give you three instances of why and how data matters so much:
1. It’s key to delivering the future of payments
I’d say the future of payments is based – 100% – on the ability to manage, access, analyse, and secure data.
A good example is the tokenisation of digital transactions, a simple yet powerful concept pioneered by Visa, which substitutes the 16-digit number found on the front of a debit or credit card with a string of numbers that can be used to authorise a transaction without exposing the underlying account details. Aside from its security benefits, this enables the delivery of ever-more personalised, intuitive and interconnected payment experiences.
Identity frameworks and biometrics will extend these capabilities further, by embedding other attributes to provide more contextual information to the transaction and giving consumers access to more choice when shopping online. In fact, show me a future-looking payment innovation – and I’ll point to the data-related capabilities that make it possible.
2. It’s key to securing the future of payments
A cornerstone of our industry is security. Without this, all else is futile. And, once again, data is key.
It seems like the whole world is talking AI right now. Visa has been using predictive AI for decades, capturing thousands of contextual data points to drive targeted insights or detect emerging patterns. Monitoring +230b transactions for signs of fraud, our AI-powered capabilities help us prevent an estimated £21b in losses each year.
We also use AI in our stand-in processing solution to mimic the authorisation behaviours of our clients – so, when an issuer’s host systems are unavailable, we can safely reduce the resulting transaction declines, safeguarding the cardholder experience and preventing associated losses. We’re excited about the potential of generative AI and are already prototyping a number of use cases which could change the way sellers sell and buyers shop.
Of course, the sheer scale of the Visa network is a key enabler. As we see more money moving in more directions, including an anticipated increase in government-to-consumer payments and remittances, we can arrive at more accurate and insightful analysis to better support people, businesses and economies.
Over the last five years we’ve invested €470m in our AI and data infrastructure, and are now working with Pay.UK applying our fraud prevention capabilities to Faster Payments to further help in the fight against scams.
3. It’s key to unlocking access and enabling choice in the future of payments
Another dividend of data is the ability to extend access to financial services to more people more safely and more quickly – because, armed with data, it becomes possible to get a fuller, faster, friction-free understanding of their true circumstances.
In the UK, for example, self-employed people have traditionally had a tough time finding a mortgage. One-in-six applications are rejected, which is twice the national average*. With open banking, it becomes possible for them to prove their income and expenditure history in seconds.
And think about the way enriched payment data can help people understand, compare and improve their carbon footprint. For example, the new partnership between Tink and ecolytiq, which combines their respective money management and climate education tools. This scalable, plug-and-play toolkit enables banks to give their customers a holistic understanding of how what they buy impacts the planet, and how to adopt more environmentally conscious behaviours.
Similarly, the partnership between Visa and Plan A empowers companies to future-proof their businesses and stay competitive by managing their net-zero journey at scale in one end-to-end platform. This is not only expected to accelerate Plan A’s vision to measure and reduce 1 gigatonne of CO2e on an annual basis, but enable more organisations to stay competitive by managing their net-zero journey at scale.
Responsible stewards of data
Of course, there’s an important caveat to all of this. It’s not just about how well we crunch the data. It’s also about how well we govern it.
As an industry, we tend not to own the data that flows through our systems. Instead, we act as stewards of that data on behalf of the real owners (i.e., the consumers and businesses who use our products and services). They have the right to know that it is being handled securely, and that, when and if they decide they no longer want to share it, they are empowered to exercise their privacy rights.
Data may be key to the future of payments, but when and how the data is used must always be handled responsibly. The industry must be sure that whatever innovations are pursued, consumers should be able to control their data and should be empowered to manage their personal information.
Ultimately, through the intelligent and responsible application of data we can deliver more convenience, more security, and better everyday experiences to hundreds of millions of people.
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*Research conducted by Opinium on behalf of Tink between 4-8 February 2022. 2,000 nationally representative UK adults, including a boosted survey to include 250 self-employed adults