From giving away cash to swiping cards on our mobile phones, the way we do payments has seen significant change over time. Every wave of change has necessitated huge technological improvements and at times technology itself has brought about new waves of change in payment process. Currently we can see few trends emerging in payments industry that throw huge opportunities for new technology and pave way for innovative solutions.
Outsourcing by Acquirers
Traditionally issuers and acquirers have been banks that handle all the functions from consumer/merchant acquisition to settlement of payments. But with increase in number of card holders/sellers and a huge increase in number of card transactions, banks are finding it beneficial to outsource most of the activities that involve acquiring customers/merchants and setting up hardware/software infrastructure for information exchange.
This has led to entry of many non-bank players into the payment ecosystem. As Payment process involves high speed data processing and enhanced data security levels all new entrants need efficient and robust technology solutions to automate their process.
Payments industry has always been haunted by frauds and data theft. A good answer to such problems is “chip based technology” which has numerous advantages over magnetic stripes. Chips can be highly secure as these can generate dynamic data thus making real time authorization possible for each transaction. Instead of having a static personal identification number (PIN) cardholders can use a different PIN for each transaction.
Currently such payments are governed by standards and specifications of EuropayMastercardVisa (EMV). Card terminals at merchant site would need drastic modifications in equipments and software to become EMV ready, thus an opportunity for new technology.
New Payment modes
Payment industry is seeing huge changes in the way consumers make payments. Portable card readers, NFC enabled mobiles, mobile wallets, contactless cards and many such innovations make it necessary for merchants and information processors to upgrade their systems to facilitate such payments. At the same time the systems need to stay compliant to all security standards.
With increase in card transactions and entry of smaller merchants, cloud payment services like cloud billing, invoicing and data processing services are seeing increase in demand. Cloud can make the life easier for smaller merchants and processors as the burden of buying infrastructure and technology is thrown off their shoulders. This would lead many companies to come up with secure technologies to provide payment services on cloud.
Payment is rapidly turning into a very complex process involving numerous modes of payments, multiple intermediaries and significantly high volumes. Increase in complexity and volume has pushed up demand for analytics services.
Third party business intelligence (BI) and analytics tools such as Business Objects and Cognos have high reporting capabilities but fall behind when it comes to ease with which they can be integrated into complex payment processes. Thus there is a need for analytical tools that handle specific issues of payment like automatic fraud detection and auto-identification of reasons for holdback and chargeback.
We feel that all such trends are going to open up a plethora of opportunities for technology companies. Exciting days ahead for payments.
Business Development Manager