Payments industry, gird your loins for a challenging 2016.
Yuval Ziv, chief operating officer of SafeCharge, said the past year saw the increasing prominence of Bitcoin as well as the growth of mobile payments, not to mention the continued implementation of 3D Secure, the rush towards globalization of online transactions, and most notably, the severe risk of data breaches and fraud.
This year, Ziv said new authentication technologies will reduce the risk of fraud, but the industry will still have to increase user acceptance.
“The widespread adoption of new authentication methods needs to be ensured to enable a more secured payment environment. Risk will be reduced with new authentication technologies such as Apple Pay. It will be harder to commit fraud. The industry’s challenge will be to adopt new technologies and increase user acceptance. More of these authentication technologies will be introduced. It will be important to make this happen without reducing conversion rates,” Ziv told CalvinAyre.com. “The continued rise of mobile commerce will assist in the reduction of online payment risks. Mobile technology continues to provide more ways to authenticate end users, for example, by giving them better device ID.”
Payment companies need to focus on their “know your customer” program and prepare to pay a high price if they fail to comply with anti-money laundering regulations.
“Greater accountability and higher fines for noncompliance of anti-money laundering (AML) mean that payment companies need to focus on a robust know your customer (KYC) program. Companies should be proactive in their approach, being equipped to know their customers at all times, not just at the on-boarding stage,” Ziv said. “Consequences of non-compliance are severe and rising. In 2014 the UK regulator alone issued £1.5 billion in fines, three times the amount of the previous year. Worldwide since 2013, financial institutions failing to meet AML rules for KYC have been fined more than $10 billion.”
In terms of expansion, Ziv said operators will find it challenging “to add certain new markets, with regulation and geopolitical issues in countries with unstable regimes, conflict zones etc.”
Still, Ziv stressed that new payment methods are needed to answer global needs.
“There should be more focus of Fintech within the industry and new payment methods to answer global needs. We need to see more new technologies that facilitate strong authentication entering the market, making online payments more secure is in the interest of all parties, shoppers and the retailers. Currently the environment is somewhat exposed and the industry needs a significant change such as the one which Chip and Pin brought to the card present environment,” he explained.
Meanwhile, Ziv noted that outside of gaming, “digital pre-paid and gift cards will continue to grow in popularity with increased user awareness and acceptance.”
Lastly, the SafeCharge COO is hopeful that there trend of mergers and acquisitions, especially in the payments industry, will continue in 2016.
“Organic growth is not always possible at the rate that stakeholders expect, so we may see mergers of some payment players with larger companies,” Ziv said.