This is a perspective that I wrote for the PYMNTS eBook 2018: The Year Of Evolution In Payments’ Revolution, in which executives from companies like Sift Science and Visa share thoughts on this year in payments.
Payments 2018 was a year of accelerated disruption. The industry lived in the shadow of the Revised Payment Service Directive (PSD2); the upcoming EU regulation, that will formalize the way banks and financial institutions securely share customer account information, to give customers payment platform freedom. This has been a long time coming, especially as the changes within the payments industry have accelerated in recent years.
Historically, cash was king. Then came checks, credit cards and wire transfers with the most recent market explosion in several digital payment options. Services like PayPal, Venmo and Apple Pay have simplified the transfer of funds, and become quite commonplace. The proliferation of these platforms have made it easy for money to be transferred among peers, consumers, and businesses, both domestically and globally. Traditionally, banks were primarily focused on the domestic market and services. Now, consumers expect these services to work a lot more seamlessly internationally than they used to.
As a result of this global adoption and expansion, there are now far more variables to contend with in the world of payments. In just a few clicks from a mobile phone, consumers can easily order and pay for cross-border goods and services. This creates a growing level of complexity for vendors, payment providers and banks that underpin these modern services, including the increase in sophisticated fraud attacks and customer demands for minimal friction and ease of use. In the past couple years, compute power has basically become free, allowing fraud rings to systematically hammer away at eCommerce sites with parallel machines running automated scripts. To further complicate matters, low consumer switching costs and high expectations of service mean that these global transactions must work seamlessly; if the experience is unnecessarily complex, most consumers will find a new provider.
We are in a world where you need to accelerate the sophistication of your identity verification methods to address these new challenges The solution to this complexity is cutting edge technology that can keep pace with modern transformation: machine learning.
While machine learning has become more accessible in recent years, it still requires data science expertise and solid fundamentals. A successful machine learning model requires data, and not just any data, but that which is normalized, in consistent formats, and from around the world to address global needs. That’s where Ekata shines. We align with the needs of the payments industry by providing inputs of the highest caliber to machine learning models and the data scientists running them.
Our data is used to provide a low-friction, sub-second identity verification experience for good customers while segmenting questionable transactions into a higher-friction (and lower-risk) path. Smart use of verification data ensures that risk models can streamline good customer experience, fight fraud, and evolve with the times.
The acceleration of technology, global transacting, and identity verification needs has given us a year of “the best of times and the worst of times”. There comes a great responsibility to better connect the digital and physical identities of customers to create seamless online experiences, while protecting people and businesses from the impacts of fraud.
For more executive perspectives, download the PYMNTS eBook: 2018: The Year Of Evolution In Payments’ Revolution