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Security Concerns Stymie Online e-Payment Adoption


Every time there’s a conversation around electronic payment solutions, the conversation somehow swivels around to paying the vegetable vendor via a mobile app to killing the cheque book and everything else in between. A laudable aim that the banking system is working towards without considering the customer’s nightmares with such a system.

A report co-created by Ovum and ACI Worldwide, a provider of e-payment and banking solutions states the obvious under these bullet points:

  • Security remains a top concern for corporates with 50% experiencing theft of payment data (up from 22% a year ago)
  • Among corporates, as many as 33% of those surveyed across consumer finance, government, healthcare, higher education, insurance and utilities, are laggards in e-payments

After surveying 1200 enterprises, the report yet again states the obvious that retail banking and FinTech players are the leading sectors in the field of payments innovations and that regulation plays a key part in forcing the industry to change. The second of these deductions is even more obvious – That customers of the above segments are less successful in balancing cultural, organizational and technology drivers to achieve to achieve digital transformation.

Pymnts.com, a website covering top news and trends in the payments industry argues that innovators need to consider several factors, from the size of the enterprise making the payments to the constraints on infrastructure of those receiving the payments. “There is no straight line to killing the cheque, but in the path to B2B payments innovation, a plethora of possibilities emerges,” it says.

The Ovum research report further refers to regulation as a key driver forcing the industry to change. Take the case of the PSD2 authentication requirements mandated in Europe. Four months ago, the European Banking Authority provided national regulators extra time for implementation. What followed was chaos as first UK delayed it by 18 months and now other countries have followed suit.

So much for regulators’ ability to get things done on time!

Just about a week ago, some of the largest players in the business of B2B payments converged in New York City to discuss ways and means to tackle the friction in the USD 125-trillion global payments volumes that flows between enterprises around the world. Experts were exploring the reasons behind the inertia of paper and manual processes in spite of all the innovation and technological advancements in the FinTech domain.

A report published in BankInfoSecurity.com quotes experts to suggest that banks aren’t reedy to comply with the new PSD2 customer authentication needs because of technical and operational challenges as well as budgetary constraints. “The bottlenecks for banks to comply with the PSD2 standards are the complexity of requirements owing to the competing environments of the third parties, particularly in the context of potential deployment of APIs, identity and security,” says the article quoting Gavin Littlejohn, chairman of the Financial Data and Technology Association.

And this is exactly where electronic payments would find it tough to get past the hurdles, especially in a country like India where businesses are family-run and the patriarch may just be averse to dealing with money online.

One cannot even blame him for not trying. It’s been close to five years after India implemented FASTags to electronically collect toll on its highways using RFID technology. The serpentine queues that one faces on these highways suggest that the country has miles to go before road users can simply whiz past the tolls, safe in their belief that the toll has been collected.

Till such time, FinTech companies may push all possible innovations on e-payments but for mindsets to change, the security concerns need to be addressed first.

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