GlobalPlatform has defined a standardized communications interface between web applications and secure element (SEs), which will enable developers of web services to build in advanced security features to protect online services against many types of attack and fraud.

By allowing web services to utilize a dedicated tamper resistant piece of hardware within a device, known as a SE, the newly released Web API for Accessing Secure Elements v1.0 enables sensitive data from online applications to be securely stored and processed in a secure, isolated environment. By doing so, it enables web services to address multiple use cases that are central to the deployment of value added services:

·         Authentication – access to an online service may be protected by a strong authentication mechanism based on credentials stored and processed within a SE.

·         Digital signatures – web applications may use a digital signature to digitally sign a document or data with a key stored in the SE.    

·         Payment – when online commerce transactions are made via a mobile device, the payment application may be hosted on the SE within a device, to enforce the security of the online transaction. This may alleviate the need for the user to handle multiple physical devices (e.g. a mobile device plus a payment card).

·         Credential provisioning – a web service may update the content of the SE to install, update or remove an application or credential it may hold. For example, a public transport app may credit a user’s NFC-enabled transport card or mobile device with tickets bought online. The tickets would be stored securely in the SE, ensuring access only to authorized parties.   

By extending the benefits of GlobalPlatform’s secure, standardized infrastructure to web services for the first time, Web API for Accessing Secure Elements v1.0 presents web app developers with advanced security options which may help them to overcome multiple security challenges presented by the increasing connectivity of mobile devices. The new API enables web-based applications to access SEs of any form factor, including UICC or eUICC, embedded SEs and smart micro SD cards.   

Gil Bernabeu, GlobalPlatform’s Technical Director, comments: “The release of this API extends the highest levels of security available currently to web services, empowering online service providers to take advantage of new use cases to protect their assets and customers in a way that has not previously been possible.

“This is particularly relevant in light of the many security challenges that we face globally as the Internet of Things (IoT) leads to an unprecedented volume of connected devices and greatly increases the attack surface at risk.  With this new API, used in conjunction with other complementary GlobalPlatform technology for SE Access Control, secure messaging and Trusted Execution Environment (TEE) standardization, online service providers can now benefit from far greater security and privacy than ever before.”

In October 2016, SIMalliance announced that it had transferred ownership of the Open Mobile API (OMAPI) Specification to GlobalPlatform. The OMAPI Specification defines how mobile applications may access different SEs in a mobile device and is currently referenced by GSMA, mandated by EMVCo in devices used for contactless payments, and implemented in over 250 models of Android NFC smartphone.

Gil concludes: “We are pleased that the release of this web API has come so quickly following the transferral of ownership of the OMAPI Specification to GlobalPlatform. Our goal is very much to expand the existing OMAPI Specification to serve new use cases and environments and a web API is the logical next step towards ensuring that secure and trusted applications across many platforms, in addition to Android, can utilise the SE to offer enhanced security benefits.”   

GlobalPlatform’s Web API for Accessing Secure Elements v1.0 has been developed to be complementary to W3C standards, with no overlap of functionality. Please visit the device specifications page of the GlobalPlatform website to access the document.

Calypso Technology, Inc., a leading provider of capital markets and investment management software, announced today it has launched a new Cloud Services Division featuring a comprehensive lineup of Cloud solutions.

“Our goal is to provide our clients with solutions that meet their unique needs and allow them to focus on their customers rather than on their IT infrastructure. Financial institutions are increasingly embracing Cloud strategies to improve agility, reduce costs, and accelerate compliance, and they need a partner they can trust.”

— Corinne Grillet, Chief Customer Officer and Head of the Calypso Cloud Services Division, Calypso Technology

In addition to their enhanced flagship Software-as-a-Service (SaaS) offering, which delivers Calypso’s award winning cross-asset, front-to-back trading platform on the Cloud, they have developed Cloud-based enterprise apps that simplify regulatory compliance with a minimal IT footprint. They also offer a Cloud-based utility solution, which enables large third party service providers to manage the back-office operations of multiple clients simultaneously.

“Our goal is to provide our clients with solutions that meet their unique needs and allow them to focus on their customers rather than on their IT infrastructure,” said Corinne Grillet, Chief Customer Officer and Head of the Calypso Cloud Services Division. “Financial institutions are increasingly embracing Cloud strategies to improve agility, reduce costs, and accelerate compliance, and they need a partner they can trust.”

“This is a major turning point for our clients and our firm,” added Calypso CEO Pascal Xatart. “There is no doubt that the Cloud will play a progressively bigger role in capital markets technology, and we expect our new Cloud Services Division to lead the industry transformation. We have taken care to ensure our range of Cloud services is flexible enough to align with the IT roadmaps of institutions of all sizes, which we believe distinguishes us from other vendors in our space.”

All of Calypso’s applications run natively on the Oracle Cloud, but the firm also supports a do-it-yourself option for clients who prefer to deploy the platform using another Cloud provider. “We are thrilled to be partnering with Oracle as the backbone of our Cloud solution,” said Jean-Marie Gatty, Director of Calypso Cloud Services. “They are among the giants of Silicon Valley, and they provide a complete, integrated, agile, security-focused Cloud solution at every layer of the technology stack. They also provide the scalability required to support the complete spectrum of Calypso clients, from the largest utility providers to smaller regional banks. Working with Oracle allows us to increase the quality, productivity, and reliability of our services.”

“The Cloud represents a huge opportunity for our partner community,” said Dan Miller, senior vice president, ISV, OEM and Java Sales, Oracle. “Calypso’s commitment to innovation with Oracle Cloud and track record of quality execution can help ensure our mutual customers receive Cloud-enabled software solutions ready to meet critical business needs.”

Calypso enables a wide range of sell-side, buy-side, and clearing firms to consolidate disparate businesses onto a single platform, standardize workflows, achieve economies of scale, and enable enterprise-wide transparency of trading and risk.

Calypso was recently awarded the 2016 Technology Provider of the Year by Asia Risk Magazine. Calypso was the #1 selling Treasury and Capital Markets Solution for the seventh consecutive year in the 2016 IBS Sales League Table.

An agreement on the establishment in the UK of a global node for a standardized digital currency based on blockchain technology was formally signed at Central Hall Westminster on January 9. China's Puerbank Group delivered the new node that will function both from an operation as well as a technological viewpoint in line with a standardized system for digital currency. The group plans to collaborate with selected companies in the UK during the establishment of the node and in an interchange of various forms of assets valued at 5 billion yuan (approx. US$720 million). Representatives from the Chinese Embassy in the UK, the UK Research and Development Centre for Chinese Traditional Culture (UKCTC), The Thames Group, Singapore Shipping Group and Central Saint Martins attended the signing ceremony.  

Puerbank Group has established a standard and a complete set of operating protocols for a digital currency and built the first large node for the currency in China. The group is gradually promoting its way of thinking in terms of how digital currencies should be managed as well as the technologies that should be deployed worldwide, and its token (the digital assets that circulate on the blockchain) as well as the business that has been built up around the use of the token has received wide support from many companies in China since its launch, laying a solid foundation for the global expansion of blockchain finance. In the UK, Puerbank Group plans to provide technologies that can be deployed to assist in the building of a digital asset module as well as to accomplish the exchange of assets between nodes within the country, and, at a point in the not too distant future, the exchange of digital assets worldwide.

"In many countries around the world, blockchain was one of the hottest topics of 2016. Blockchain-based private digital currencies developed fast, and at the same time, the competition among digital currencies quickly became so fierce that even the Bank of England announced its intention to run virtual currencies as a trial. As a result of these rapidly unfolding events, existing digital currency issuers quickly found themselves obliged to establish an effective operating system, especially in view of the need for asset safety and to provide a platform that would allow issuers to build a reputation. Puerbank Group believes that having a fully standardized system is the most effective way to enhance competitiveness among private digital currencies," said Mr. Seven, Chief Overseas Representative of Puerbank Group, when commenting on the development of asset digitalization.

In China, Puerbank Group first assembled some highly refined collector's tea and established the tea as the standard asset, and, on the back of the asset, issued a digital currency in full compliance with the standard that it had developed. The group named the currency Puyin. Then, through an open-source asset expansion program, the assets grew in volume and now have a value in excess of 100 billion yuan (approx. US$15 billion). Puerbank Group took steps to make sure that their technology was sufficiently robust to handle the high volume of assets swaps. The model proved highly effective in that available market resources were quickly mobilized, and a rapid, high-frequency, exchange of commodities started to take place, significantly promoting economic growth. This model can be localized to build nodes anywhere worldwide, and, by using the local node, manage a blockchain-based financial eco-system in tandem with localized "local currencies". Ultimately the model will be able to handle cross-border asset conversion and circulation through the exchange and settlement of these "local currencies" in combination with "tokens" such as Puyin.

At the same time that the node in the UK was established, a node in California's Silicon Valley was also put in place. The global blueprint of a digital currency backed by a standard has begun its infinite extension from two points connected by a single line. It will be not long before digital assets are quickly converted free of obstacles within a full-functioning infrastructure via a standardized digital currency. The world of commerce looks forward to that day.

RSRCHXchange, the online aggregator and marketplace for institutional research, today released the results of a survey analysing the readiness of asset managers for the research unbundling rules coming into effect in January 2018 as part of MiFID II. The survey was conducted towards the end of last year by polling company Survation, who canvassed the views of 234 respondents, representing over 200 firms and $15trn of AUM, making this the biggest survey of its kind.

The survey shows a distinct shift of research budgets away from the top nine investment banks, with just 13% of respondents expecting to pay for research from all of the largest banks and 72% expecting to use research from less than five banks. The dominant market share of the global investment banks is likely to come under pressure with 67% of respondents expecting these banks to constitute less than 60% of their research spend going forward.

Overall, fund management firms did not expect research budgets to fall dramatically.  42% expect their firm’s research budget to remain the same in the next two years and 26% expect budgets to rise.

The asset management industry has significant work to do in order to comply with MiFID II unbundling requirements, but firms are planning on early adoption. Around half of the respondents who expressed a view expect to be compliant by the middle of 2017. Setting and regularly assessing a research budget was seen as the biggest challenge to complying with MiFID II (37%), while assessing the quality of research was the next largest concern (23%).   

Even at this stage, 50% of respondents are undecided on how they will pay for research under MIFID II. 38% of those who did express a view on how they will pay for research said they would be paying from their own P&L.  

Other results from the survey included:

• 86% of US funds anticipate the MiFID II rules on research unbundling to impact them eventually

• 54% of respondents at the biggest funds expected their research budgets to fall

• Written research is by far the most valued and most frequently consumed of all the research services

Jeremy Davies, Co-Founder of RSRCHXchange, said: “The landscape of institutional research is shifting and asset managers are reviewing and adjusting their working practices to keep pace. Some of the results of this survey will come as a surprise to the industry, especially the decline in research spend with the big banks."

He added: “At RSRCHXchange we have anticipated significant changes in the institutional research space and have set up an aggregator that can handle research procurement and consumption in a MiFID II-compliant way. We are pleased to see the market voting with their feet, with over 1,000 asset management firms signed up and around 185 research providers posting their research notes and subscription content to our platform.”

OANDA Global Corporation’s Board of Directors has appointed Vatsa Narasimha, formerly CFO of OANDA, as its CEO. Mr. Narasimha succeeds Ed Eger who, alongside the Board, hand-selected Mr. Narasimha for the role. Mr. Eger will remain at OANDA to support Mr. Narasimha during a transition period.

Over the past three years, Mr. Narasimha has been a critical part of the OANDA success story. Under Mr. Eger’s mentorship, he has helped the firm grow in new sectors and regions, streamlined and automated operations and built a data-driven, customer-focused team.

Kittu Kolluri, Chairman of OANDA, said, “I would first like to thank Ed for his tremendous leadership at OANDA. As CEO, Ed took a technology-driven approach to growing our services, increasing our market share, establishing record revenue and client growth, and taking customer and employee satisfaction to all-time highs. On behalf of the Board and our group of talented employees, we thank him for shaping OANDA into the business it is today.”

Mr. Kolluri continued, “Working closely with Ed over the last three years, Vatsa has been fundamental to OANDA’s growth. He brings strong financial management, sharp operational insights, and a global perspective. Under Vatsa we will carry on building scale and excellence. The Board is confident he will continue to deliver greater employee, customer and shareholder value.”

Mr. Eger commented, “It’s been an honor to lead OANDA. We have accomplished a great many things around the globe, diversifying the business and firmly establishing OANDA as the technology platform of choice for organizations’ and consumers’ foreign exchange and trading needs. It’s been a pleasure working closely with Vatsa and the team to achieve the growth we have over the last three years. I look forward to watching him build on these successes.”

Prior to joining OANDA in 2013, Mr. Narasimha was a Principal of The Boston Consulting Group (BCG). While at BCG, he led a number of financial institutions through growth strategies, corporate development and a variety of operational transformations.

He comments, “I’m thankful to Ed for his leadership over the last three years and proud of what we have been able to accomplish. As CEO, I will continue to expand OANDA’s trading, data, and cross-border payments businesses, retaining the steadfast OANDA commitment to exceptional technology and customer service.”

UK accountants are at risk of their pro-Europe stance hindering business growth, as just 13 per cent state leaving the EU will result in a commercial gain.

A study, conducted by IRIS Software Group, found a resounding 68 per cent of accountancy firms don’t believe invoking Article 50 will have an impact on their business. Of those who did believe Brexit will impact accountants, more felt this would be detrimental (18 per cent) than beneficial (13 per cent).

Despite the sheer volume of accountants who don’t feel Brexit will impact their practice, when asked how they would vote if the Brexit referendum was held today, 65 per cent stated they would vote to stay in the EU. This is an increase on a study carried out by IRIS prior to the referendum, which found 56 per cent of accountants were planning on voting against Brexit.

Rob Case, partner at accountancy firm Randall & Payne LLP, is surprised by the results, stating that despite their political beliefs, all accountants should be looking not only to support their clients in this time of uncertainty, but also seek out the opportunities that Brexit may create.

He says, “For accountants, any legislative change which impacts business finance and taxation should be viewed as an opportunity to advise and support our clients, and Brexit is no different. Those accountants who may not see the potential opportunity invoking Article 50 has could find themselves being left behind by the competition.

“For example, VAT is a European-wide tax and it’s currently unclear how this will change once we’re no longer in the European Union. Many will see this uncertainly as a negative, and the potential administrative burden may well be, but change can also equate to commercial opportunity, which may in turn lead to increased growth and profits.  Although having this information sooner rather than later is preferable for all concerned.”

The 18 per cent which stated Brexit will have a detrimental impact on their business may be worried about losing clients if invoking Article 50 results in companies moving abroad. However, Sion Lewis, CEO Accountancy Division at IRIS Software, believes accountants must position themselves as business advisers to support British business through this period of uncertainty.

He says, “It is a tumultuous time for accountants and their clients in the UK, with Brexit looming large and HMRC yet to reveal exactly what its

Making Tax Digital mandate will look like. Although the vast majority of accountants don’t believe Article 50 will impact the industry, it’s key they respond to the uncertainty surrounding this to position themselves as a vital part of their clients’ businesses.

“Now more than ever, businesses will be relying on high-level advisers to guide them through the difficult decisions ahead. By utilising the technology tools available to automate accountancy and communicate with clients online, firms can begin adding true value to businesses throughout the UK. Only then can accountants and their clients begin planning for growth in post-Brexit Britain.”

Verint^® Systems Inc. shows a 7% drop in customer retention compared to a similar survey conducted one year ago. This latest large-scale study of more than 24,000 consumers in 12 countries across nine industry sectors—conducted in partnership with Opinium Research LLC—found that consumers who prefer to do business through digital channels are more likely to swap providers than those that engage with businesses though human touch interactions, such as those that take place by phone via the contact centre or in-store.

Across all sectors,57% of consumers have been with their service providers for more than three years. Banks lead in terms of customer retention, with 73% of consumers reporting they have been with their provider for more than three years, whereas only 8% said they have been with their bank for less than a year. Mobile phone providers ranked second best, with 63% of consumers remaining with their provider for more than three years.

Japanese companies had the highest retention rates of all countries surveyed; an average of 64% of consumers have been with their providers for more than three years. French companies also fared well, with 60% of consumers staying with their providers for more than three years. Meanwhile, in the US, 55% of consumers have been with their service providers for more than three years. However, Brazilian, Indian, Mexican and British consumers are more prone to switching. Only 35% of Brazilians reported remaining with their providers for more than three years, followed by 46% of Indians, 50% of Britons and 50% of Mexicans.

The study also shows a clear link between communication channel preferences and retention. Consumers who prefer to engage with organisations digitally are more prone to switching providers. Just under half (49%) of those who prefer to engage with organisations via digital channels have been with providers for more than three years, compared with 58% who prefer to pick up the phone and 57% who prefer to go in-store.

Tapping into the impact that different customer experiences have on loyalty and brand endorsement, the research highlights that consumers who have a good customer service experience on the phone or in-store are more likely to behave positively toward a brand than when online. The study also revealed that consumers who have good experiences either in-store or speaking to someone on the phone are:

• 38% more likely to renew their product or service, even if it isn’t the least expensive option.
• 27% more likely to sign up to an organisation’s loyalty programme.
• 19% more likely to leave a positive review. 
   

“What’s clear is that a more personal touch in customer service helps drive retention and loyalty. This is a wake-up call for many organisations looking to introduce more digital channels with the aim of reducing costs and improving customer convenience,” notes Rachel Lane, director of customer analytics, EMEA at Verint. “As our research shows, consumers feel more positive about a brand when they interact directly with a person, so organisations need to consider how to make the digital experience more personal to avoid increased customer churn.”

Adds Lane, “Our research, which also investigated what service providers and brands believe their customers want, revealed that 91% recognise that customer service online should be quicker, more intuitive and better able to serve customer needs. That means organisations now need to focus on providing a more personal experience across all customer engagement channels to build the foundation for loyal customer relationships.”

Offline and online commerce are rapidly converging.  Brick & mortar retail models are rapidly changing. And consumers are increasingly demanding simple, fun and secure experiences no matter where or when they shop. Multilane merchants need a platform capable of supporting their vision for the future including digital offers, loyalty and payment, targeted marketing and seamless omni-channel connectivity. Verifone designed the M400 to enable this for its department store, specialty retailer, grocery store, hotel, quick service restaurants and convenience store clients.

"The M400 represents an entirely new level of design innovation for multilane merchants," said Glen Robson, EVP of Verifone Solutions. "We have the advantage of working with the world's best retail brands, and leading technology companies. And we spent countless hours working with our clients and partners to develop a device capable of fueling their vision for the future of retail commerce."

The M400 expands on the success of Verifone’s industry-leading MX series while incorporating new innovations and features for unprecedented investment protection, consumer engagement capabilities, and a seamless transition for merchants using MX900 series devices. Benefits for merchants include:

·       Accept any payment: EMV-capable, with integrated NFC and Bluetooth Low Energy (BLE) for acceptance of all popular mobile wallets

·       Safe and secure: fully-supported PCI-certified device, compatible with Verifone end-to-end encryption and tokenization solutions for multi-layered security

·       Designed for consumers: sleek design, smaller footprint than Verifone MX series devices, and an enhanced, multi-touch, intuitive user interface

·       A marketing machine: stunning 5-inch display, split screen capabilities, increased memory to support full-motion video and hi-resolution graphics

·       In-store targeting: Bluetooth and Bluetooth Low Energy (BLE) support for identifying consumers and delivering personalized offers via beacons

·       Build once, port multiple: highly secure Linux-based OS, development tools and App Marketplace, seamless porting of MX900 series to M400

·       Backwards compatibility: Verifone MX clients can leverage their existing installation to simplify upgrades (e.g.: cable, stand), saving on unnecessary costs

·       Retail ready: extreme durability for high-traffic multilane environments

“The Verifone M400 is an impressive solution that is ideal for meeting the growing demands of merchants and consumers in markets such as the Nordics that are serious in their efforts to drive advanced commerce,” said Hans Petter Hoel, CEO of Retail Payment, a Norway-based payment acceptance platform provider owned by the country’s leading retailers. “Our common goal is to ensure that future payments are customer-friendly, secure and cost efficient. As Retail Payment introduces an open omni-channel platform to the market as the de facto standard infrastructure for future payments, innovations such as the M400 improve the customer experience in store.”

Offline and online commerce are rapidly converging.  Brick & mortar retail models are rapidly changing. And consumers are increasingly demanding simple, fun and secure experiences no

matter where or when they shop. Multilane merchants need a platform capable of supporting their vision for the future including digital offers, loyalty and payment, targeted marketing and seamless omni-channel connectivity. Verifone designed the M400 to enable

this for its department store, specialty retailer, grocery store, hotel, quick service restaurants and convenience store clients.

"The M400 represents an entirely new level of design innovation for multilane merchants," said Glen Robson, EVP of Verifone Solutions. "We have the advantage of working with the world's

best retail brands, and leading technology companies. And we spent countless hours working with our clients and partners to develop a device capable of fueling their vision for the future of retail commerce."

Welcome to Advanced Commerce

The Verifone M400 is designed to serve as a cornerstone of a complete vertical solution. It will easily integrate with Verifone's Point Payment Solutions; Verifone Estate Manager (formerly

VHQ); the Verifone Commerce Platform;

Verifone e-Series mobile devices; and other

Verifone Engage family devices.
 

The M400 expands on the success of Verifone’s industry-leading MX series while incorporating new innovations and features for unprecedented investment protection, consumer engagement

capabilities, and a seamless transition for merchants using MX900 series devices.

Benefits for merchants include:
 

·       

Accept any payment: EMV-capable, with integrated NFC and Bluetooth Low

Energy (BLE) for acceptance of all popular mobile wallets

·       

Safe and secure: fully-supported PCI-certified device, compatible with

Verifone end-to-end encryption and tokenization solutions for multi-layered security
 

·       

Designed for consumers: sleek design, smaller footprint than Verifone

MX series devices, and an enhanced, multi-touch, intuitive user interface

·       

A marketing machine: stunning 5-inch display, split screen capabilities,

increased memory to support full-motion video and hi-resolution graphics

·       

In-store targeting: Bluetooth and Bluetooth Low Energy (BLE) support

for identifying consumers and delivering personalized offers via beacons

·       

Build once, port multiple: highly secure Linux-based OS, development

tools and App Marketplace, seamless porting of MX900 series to M400

·       

Backwards compatibility: Verifone MX clients can leverage their existing

installation to simplify upgrades (e.g.: cable, stand), saving on unnecessary costs

·       

Retail ready: extreme durability for high-traffic multilane environments

“The Verifone M400 is an impressive solution that is ideal for meeting the growing demands of merchants and consumers in markets such as the Nordics that are serious in their efforts

to drive advanced commerce,” said Hans Petter Hoel, CEO of Retail Payment, a Norway-based payment acceptance platform provider owned by the country’s leading retailers. “Our common goal is to ensure that future payments are customer-friendly, secure and cost

efficient. As Retail Payment introduces an open omni-channel platform to the market as the de facto standard infrastructure for future payments, innovations such as the M400 improve the customer experience in store.”

Demo the Verifone M400 at the NRF Retail’s Big Show, January 14-17 in New York City. It will be available mid-summer 2017, initially in the U.S. and Norway.   

The European Banking Authority recently drafted the latest technical standards for the Payment Services Directive II (PSD2), which serves as the legal foundation for a new cross-EU payments market. In 2016, European e-commerce sales are expected to increase 17% to €183 billion and the use of payment service providers (PSPs) is increasing significantly. Couple this with the changing attitudes around Internet banking and online payments, it is no surprise that the directive is coming out at this time, as the payments market is changing at such a rapid pace.

A new standard is being defined for the market. But does PSD2 take Card Not Present (CNP) payments in the right direction? Within the latest draft, one of the key elements is the requirement for strong customer authentication for all transactions except those under a certain monetary threshold. However, strong customer authentication is most often to the detriment of the convenience for customers.

The inclusion of CNP transactions

The original password-based 3D Secure protocol (v1.x) added too much friction into the transaction and consequently suffered from a lack of user adoption. This, plus the prevalence of new payment methods like mobile and eWallet, have led the industry to call for an updated protocol.  Led by EMVCo, industry leaders and security vendors came together to develop the long-awaited, and recently released 3D Secure 2.0 protocol which eliminates static passwords and recommends a risk-based approach for card-not-present transactions (and several other new enhancements).

With a risk-based approach, every transaction is still evaluated to ascertain if it should be flagged as suspicious or potentially fraudulent. For most issuers, a typical fraud rate is <1-2%, so it is imperative to be able to identify only the highest risk transactions to challenge for further authentication.

The impact of customer authentication for card issuers

A major UK bank, found that when it moved away from mandatory password-based authentication for all transactions, it realised a 4% increase in transaction success rate as a result of improved customer experience. This translates to a 4% growth in transaction volumes, not only for issuers, but also for the merchants, the card schemes and the acquirers, and most importantly the customers. However, if friction to the end user experience is added, it’s possible to lose 4% of sales. That is not a figure any provider in the e-commerce ecosystem wants to be reporting to their key stakeholders.

Experience from the field

What about the increased fraud? We’ve found that risk-based authentication can improve fraud detection rates when compared to 100% authentication. Issuers, merchants, acquirers, card schemes and, especially, cardholders benefit tremendously from a risk-based approach. Less fraud and less friction is a win-win combination.

Despite the successes from this approach, there’s always room for even higher fraud prevention rates with improved omni-channel visibility. For example, when looking at card-issuing banks in the UK, the bank’s view of a digital footprint starts at application for the new card account, and is reinforced through every interaction the customer has with them. This includes every time a user logs into online banking and every time a CNP transaction is carried out online. In isolation, an expensive watch being purchased online may look like a high-risk transaction. However, when cross-referenced, the bank will see it’s the same device from the same location that was used to open the credit-card account giving them much greater confidence that the transaction is being performed by the legitimate cardholder. Is it necessary for the user to get up and go find the hardware token to authorize a low risk transaction?

What the future holds

The EBA is being overwhelmed by the amount of responses to the technical standards consultation. The industry is saying that the proposed technical standards are counterproductive to the goals of the PSD2 and even the 3D Secure 2.0 protocol – to provide strong customer authentication and a friction-less customer experience. In the card not present space it took more than ten years, but issuers and merchants learned that a challenge all approach did not work and thus a major change was necessary.

Such is the nature of the technology required to address the ever-changing fraud threat, organisations must incorporate layered fraud prevention using a number of technologies. Vendors will need to do much more to provide components that fit neatly into the organisation’s architecture to address a specific problem.

To challenge the EBA, it’s necessary to look at the bigger picture, and not just the transaction in isolation. Of course, they will cite the fact that not all PSPs are equipped with the resources and the data available to big banks. This may be true, but the directive needs to be flexible enough to adapt to that. Don’t penalise the issuers, the merchants, the card schemes, the acquirers – and most importantly, customers – by introducing unnecessary friction that won’t do anything to improve the fraud prevention rate.

The European Banking Authority recently drafted the latest technical standards for the Payment Services Directive II (PSD2), which serves as the legal foundation for a new cross-EU payments market. In 2016, European e-commerce sales are

expected to increase 17% to €183 billion and the use of payment service providers (PSPs) is increasing significantly. Couple this with the changing attitudes around Internet banking and online payments, it is no surprise that the directive is coming out at

this time, as the payments market is changing at such a rapid pace.

A new standard is being defined for the market. But does PSD2 take Card Not Present (CNP) payments in the right direction? Within the latest draft, one of the key elements is the requirement for strong customer authentication for all transactions

except those under a certain monetary threshold. However, strong customer authentication is most often to the detriment of the convenience for customers.