How to manage customer experience security and risk

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Whatever form it takes, risk is inherent in money mobility, because delivering instant or near-instant payments to multiple terminals in a range of currencies means wading through the red tape of all kinds – including compliance and security issues – as efficiently as possible at scale.

Financial institutions (FIs) and FinTechs must be able to meet these challenges and continue to meet the security and experience needs of their customers in multiple ways across multiple offerings. “The Money Mobility Playbook: Delivering Money-out Mobility at Scale”, a PYMNTS and Ingo money collaboration, looks at four areas where these challenges arise: debit and prepaid cards; digital wallets, digital currencies and peer-to-peer (P2P) applications; instant issue accounts and disbursements; and merchants and retail payments.

The Playbook also outlines the steps that FIs and FinTechs can take to implement a successful money mobility innovation strategy, regardless of the technology they currently use.

Debit card payments fraud has increased by 20% since the start of the pandemic, which means that FIs have had to find new ways to meet the needs of their customers without compromising their experiences, while managing compliance issues and ensuring that the activities of senders and receivers of payments comply with know your customer (KYC) regulations.

Prepaid cards are often used by money launderers and fraudsters for less than noble activities, so many FIs have shunned them lately, even though they can be valuable tools for financial inclusion. Fraud is particularly difficult to monitor on prepaid cards, as most can be purchased without ID.

When it comes to digital wallets, digital currencies and P2P appsconvenience has captivated many consumers and their views on payments. Instant payments that can be programmed and personalized are now the norm for consumers sending money online.

“Digital wallets are emblematic of modern monetary mobility, as they make it easier for consumers to streamline payments and track spending,” the Playbook said, but they can also be hampered by interconnectivity issues, which means consumers sometimes need multiple wallets to achieve payment ubiquity.

“As instant payments technology has become more accessible, consumers have incorporated it into their everyday shopping habits, whether sending money to friends through P2P apps, scheduling bill payments or track contributions to savings accounts through FinTech apps,” the Playbook says.

P2P payment apps Venmo and Zelle, among others, have made it easier to send instant payments to friends, retailers or strangers, meaning consumers continue to expect this experience to be available to them on all platforms, despite the exponential risk to them and their FIs. .

Instant Issue Accounts, meanwhile, are popular customer experience features that deliver great value to consumers who prioritize convenience and pose significant risk to payment processors and FIs, the Playbook said. US banks lost an estimated $3.5 billion in new account fraud in 2021, and inadequate user authentication processes caused much of that loss.

“Instant accounts present an additional security challenge for FIs because securely meeting consumer demand for rapid account opening requires access to data that identifies bad actors or the use of synthetic identities. “, according to the Playbook. “This means that FIs need a robust risk identification system in place before offering instant account access.”

When it comes to merchant and retailer payments, merchants are uniquely charged with maintaining compliance, security, and high consumer expectations. They not only have to filter out fraudulent chargebacks – total chargebacks cost the industry an estimated $800 million in 2021 – but they also have to tackle card-not-present (CNP) fraud, with these types of transactions having increased by 25% since then. the onset of the pandemic and related fraud and security countermeasures have also increased over the past two years.

“Rich, multi-channel user data, including potential malicious actors, can limit false positives while supporting robust transaction risk management,” according to the Playbook. “Money Mobility networks are therefore critical for retailers looking to balance security and consumer engagement.

For more information, download “The Money Mobility Playbook: Delivering Money-out Mobility at Scale”.

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NEW PYMNTS DATA: THE CUSTOM PURCHASING EXPERIENCE STUDY – MAY 2022

About: PYMNTS’ survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where merchants are succeeding and where they need to up their game to deliver a personalized shopping experience.

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