Andrew Reszka, Regional Head APAC, Verifi
In Australia, NSW Transport recently announced that all commuters on public transport can “tap on” for single trips using their credit cards, phones, tablets, and smart watches, rather than using the existing payment method – Opal cards. Similar initiatives are also underway in Melbourne and Brisbane. This growing momentum among state governments to support tap-and-go credit and debit card payments is closely watched by many in the banking sector. Will the increased use of digital payments for public transport trigger broader shifts in consumer behaviour, as has occurred in some overseas markets?
Allowing credit and debit card payments on public transport may drive more consumers away from cash, and even plastic cards, towards payments on smartphones or wearable devices. Furthermore, this highlights a wider shift in Australia’s payments landscape toward contactless payments – a taste of the cardless society to come.
But how will these changes and the likely longer-term transition to digital wallets impact the management of payments and payment risk? And what exactly is a digital wallet?
A digital, or mobile, wallet allows you to store payment card information in digital form through an app. Instead of using the physical payment card for a purchase, you use the mobile wallet app. Apple Pay, Samsung Pay, PayPal and Google’s Android Pay are just some of the products currently vying for the top spot as digital wallet of choice.
Mobile wallets, cardless payments, and tap-and-go transactions all serve to remove friction in the payments process. This has become a critical feature of customer experience for many businesses. However, with multiple payment options in play it’s vital that merchants keep up with the required security and authentication features, to avoid placing their customers at risk of fraud or the increased potential for chargebacks.
Managing payments risk, taking the fight to fraud
Mobile wallets are more secure than many other payment options because of built-in tokenisation. This technology replaces account and card information with a non-sensitive numerical ‘token,’ whilst also supporting authorisation and authentication within milliseconds. The ‘token’ is used as an identifier during the payment process and can only be traced back to the original account or card data with a master key.
Tokenisation makes payments more secure and ensures protection of sensitive customer data in the event of a security breach. However, it doesn’t protect a merchant from the act of a breach itself. As such, it’s still essential that businesses have robust security measures in place to protect their data and their customer’s information, particularly with the recently implemented Notifiable Data Breaches scheme – and the impending GDPR, for which any ANZ business that sells to European customers must prepare. By reviewing all points of the customer journey and investing in the right technology, businesses can better protect themselves from payment fraud, chargebacks, and security risks.
New technologies like mobile wallets allow for more seamless, convenient, and secure payments. They also have huge potential to improve customer engagement, prevent financial and reputational losses associated with security breaches, and enable merchants to deliver higher quality experiences for their customers.
Staying afloat in the changing future of payments
We’re only really scratching the surface of what’s happening in the world of payments, and there are many more exciting developments on the horizon, particularly in e-commerce.
At a time when everything is moving so quickly, merchants and their banks need to be flexible, agile, and constantly thinking of the customer experience. Wait too long to integrate technologies like tap-and-go or digital wallets, or to deliver a personalised shopping experience with the appropriate security and fraud protection mechanisms, and your customer will leave.
Do you feel prepared for the evolution of payments? Are your customers’ transactions secure? Are you managing risk accordingly? Verifi has a deep understanding of these trends and how you can deliver the best experience for your customer, whilst satisfying regulatory requirements. Contact us to keep your business in line with consumer demands, bank expectations, and the ever-present fraud risks lingering in the background of this exciting payments universe.