• Genevieve Mattheus, Head of Implementations and Testing at Paymentology


• 07.04.2022 09:59 am

Genevieve Mattheus is a payments expert and Head of Implementations and Testing for Paymentology, a global card issuer and growing payments processor operating in 49 countries across 14 time zones.

1. How might two-factor authentication rules affect e-commerce in the long run? Are there any other benefits apart from data security?

The new two-factor authentication regulation will affect e-commerce,  as e-commerce transactions rely on authentication. Any changes to regulations of that practice may risk transactions being abandoned by consumers if the new architecture becomes cumbersome and time-consuming.

Two-factor authentication must be kept simple, and cardholders should be able to authenticate themselves quickly and easily. If not, there could be an increase in abandoned transactions, which in turn will lead to revenue loss, higher costs, cardholder complaints, loss of reputation for issuers, and may even lead to cardholders using other payment methods, or changing issuers. The key is to make e-commerce transactions as frictionless as possible from an authentication perspective by way of richer data exchange.

In the long run, the benefits span: reducing the processing of fraudulent transactions and online fraud, increasing cardholders’ confidence to perform eCommerce transactions with convenient and secure services, reducing the number of disputes cardholders lodge and issuers need to process, and last but not least, ensuring compliance with international regulations such as PCI-DSS and PSD2.

2. Will this new Strong Customer Authentication change the way people confirm their identity? Are new measures similar to the online banking logging-in process? 

Cardholders have been enforcing SCA since the very introduction of mobile devices and laptops that have passwords or biometric login, with services like 3DS secure. SCA requirements are very similar to those faced by people logging into online banking. SCA and online banking login include elements of knowledge – something you know such as a password or PIN, possession – something you have like a security key or device, or inherence – physical attributes, like biometric markers. 

One example of this is during an eCommerce transaction. If a cardholder uses a password as the first factor of authentication to log in, then enters an OTP during the 3DS authentication as a second factor of authentication, it means the cardholder has stepped up to a higher level of security. These authentication methods are independent, so if there is a breach of one, it will not compromise the reliability of the other.

3. As you know, banks are massively embracing full-scale digital transformation. With it, what are the major challenges on the way to adopting the latest technologies? 

Banks face many challenges on the way to adopting the latest technologies. Firstly, in an operational sense, banks will need to adapt their traditional business model to become more agile, innovative and adaptable; simultaneously removing obstacles faced by legacy processes.

Another obstacle banks face is not being able to build and implement technologies with digital capabilities at the exponential pace desired by consumers. A pace that is rapidly accelerating post-pandemic, with a massive shift in all sectors – but specifically payments – towards a fully digital approach.

In the day by day, banks must also ensure that existing systems continue to operate without interruption. It’s no use adapting to the latest trend if your business can’t operate successfully in the process, as all your customers will leave before reaping the rewards. 

A more obvious challenge is from outside forces rather than any issues with implementing the technology. New competition from the wave of fintechs and neobanks already offering preferable services can mean that by the time traditional banks have implemented their digital offerings, they’ve already been replaced. 

More specifically, a lack of ability to take on a customer-centric approach, personalize the customer experience or provide product granularity, is hampering banks. This focus on customer experience and transparency is a major element of the attraction of neobanks. If banks fail to provide these services, consumers will continue to favor the neobank approach.

4. What problems may next-gen payment platforms cause from a financial perspective? Do the benefits outweigh the drawbacks? 

Next-gen platforms bring increasing pressure on revenue for businesses due to costs associated with the adoption of new technologies, the transfer of legacy processes, and regulatory pressure to make services like instant banking available.

Furthermore, low or no service fees that new payments providers offer, threaten traditional banks. Unlike their modern contemporaries, banks historically used service fees as valuable lines of revenue,  and other traditional sources like interest margins, interchange and cross border fees. This will need to be re-assessed by traditional banks if they are to remain competitive.

The costs traditional banks will need to take on for digitising to cater for data-rich environments and the ability to use the data will be immense, if not  done effectively and without the collaboration of the right partners. This includes costs associated with security and cloud adoption. With payments rapidly becoming fully digital, banks will be required to commit significant investment in technology to offer a compelling value proposition.

The onerous requirements to comply with regulations will also have an impact on banks if they fail to adhere to them. However, the benefits, in the long run, will outweigh the drawbacks. Transforming legacy banking processes will enable faster, smarter decisions which, in turn, will positively impact the customer experience. Simpler processes will make it easier to automate which will reduce costs throughout every area of a bank.

Overall, digitalization will enable more open and transparent adherence to banking regulations and help banks stay compliant. By operating across a connected platform, banks can use technology such as AI and data analytics to learn from the full complement of customer and company data. They can then use the data to adapt to change. By embracing the opportunity of a next-gen payment platform with the best APIs, scalability, migration expertise, and global reach, traditional banks can rival the new payment challengers.

5. How are these rapid changes affecting Paymentology’s ability to connect with its customers? Should challenges be viewed as the main drivers for future success?

Rapid changes are increasing Paymentology’s ability to connect with customers. Our feature-rich application programming interfaces (APIs) and complete Cloud solutions are geared toward digital disruption and let us customize, migrate, scale, and deploy large-scale digital projects quickly and without friction.

Banks need to ensure they can execute their vision at scale, with the highest levels of security and reliability, so they will need to work with processors with the capacity and expertise to both migrate and scale their operations smoothly and quickly. This gives banks several advantages, including time to market, because the introduction of new payments can be expedited, upfront capital investment is reduced and products can be continuously updated with little maintenance or investment.

With our extensive experience in modernizing traditional banks’ payment systems and our Platform's supreme flexibility, we can digitize complex systems, rapidly and smoothly. We also handle platform maintenance and upgrades, allowing banks to focus on revenue, rather than system optimization.

Our new generation of technology and Cloud-based solutions also enables banks to expand quickly and modernize their payments products without incurring high upfront costs. Banks can integrate into our platform via our APIs and link new digital products into their core banking platforms, in essence, offering Cloud-based payments services instantly.