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In parallel to this challenging year in which time often seemed to stand still, global economies moved quickly in ways that accelerated change, bringing lasting impact to consumer behavior, fraud patterns and risk mitigation needs.
This year, Visa has focused our expertise and resources in ways to help financial institutions, merchant partners, governments and consumers navigate these seismic shifts. Looking ahead to next year, I believe many of the changes in digital payments will carryover. More importantly, the experiences of this year will accelerate innovation and force companies to learn from their mistakes to ensure they are not repeated.
Looking ahead to 2021, the below outlines my predictions for payment security in the coming year.
- Consumer habits born from the pandemic will become the new normal, requiring updated fraud prevention strategies by merchants.According to Visa’s Back to Business Study, a vast majority (70%) of consumers have used a new shopping or payment method for the first time since the start of COVID-19, including 26% who have used tap-to-pay technology for in-store purchases.1 What’s more, nearly two-thirds (63%) of consumers say they would switch to a new business that installed contactless payment options. I believe these consumer preferences are not temporary and are here to stay.2These consumer behaviours will further drive merchants to innovate in order to grow and meet customer preference. Investments by merchants in new ways to onboard customers and new ways to pay such as online, in-app, contactless, and IoT (wearables, in-car, smart speakers, smart appliances, etc.) will be rewarded through new customer acquisitions, existing customer retention and growth in sales.But as merchants move online, so are fraudsters. Payment security is difficult and not everyone in payments has the expertise to do it well. Merchants will need to update their fraud prevention strategies to support omnichannel commerce and if in-house expertise is not available, merchants should turn to proven, reputable partners that can produce outcomes aligned to their business goals and interests.
- The Strong Customer Authentication mandate will help bolster payment security outside of Europe.The Strong Customer Authentication (SCA) mandate starts on the 1st of January, with European countries imposing their respective deadlines throughout the year. Despite this being a mandate for European countries, efforts to strengthen and meet SCA requirements will reverberate beyond Europe. With the increase in fraud activities in card-not-present channels, some multinational corporations will likely extend the strengthened security measures to other markets where fraud activity is high.
- Modernising payment infrastructures will reveal new potential vulnerabilities.A growing number of incumbent banks and fintechs are challenging tradition and exploring new and faster ways to send money, settle payments and share information. Real time payments, digital currency and Open Banking supports innovation that matches the expectations of digitally savvy consumers and will help drive digital commerce for decades to come. But faster payments open up opportunities for faster fraud and sharing of customer information must have data privacy in mind.Both fintechs and banks will need to have mechanisms in place to spot atypical patterns that can be an indicator of fraud. It is also important that the principles of Open Banking and the sharing of data is used responsibly and ethically across all products, services and technology. 2021 will see payment volumes in real time payments continue to grow, digital currencies continue to become mainstream, consumer and data privacy at the forefront of many discussions, and industry players working together to resolve new vulnerabilities that are revealed.
1 Visa, p.12, Back to Busines Study, June 2020
2 Visa, p.11, Back to Busines Study, June 2020