Consumers need to stay alert as skimming continues to grow
- Compromises of ATMs and point-of-sale (POS) devices in the U.S. rose 21 percent in the first six months of 2017, compared to the same period in 2016.
- Compromised cards rose by 39 percent.
- Cardholders should employ common sense when using ATMs, and check their transactions frequently.
- FICO® Card Alert Service monitors hundreds of thousands of ATMs in the U.S.
The number of cards compromised at U.S. ATMs and merchants rose 39 percent in the first six months of 2017, compared to the same period in 2016, according to new data from Silicon Valley analytic software firm FICO. FICO has also tracked a 21 percent increase in compromises of ATMs and point-of-sale (POS) devices in the U.S. in the first six months of 2017, compared to the same period in 2016.
The number of compromises is on target to set a new high for the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the U.S.
“The rate of fraud pattern changes has accelerated in the last 24 months, requiring us to continuously adapt our predictive analytics to stay on top of this criminal behaviour,” said TJ Horan, vice president, who oversees FICO’s fraud solutions. “We have introduced new AI technology into our FICO Falcon Fraud Manager platform, which protects most of the payment cards in the U.S.”
FICO offers these tips for consumers:
- If an ATM looks odd, or your card doesn’t enter the machine smoothly, consider going somewhere else for your cash.
- Never approach an ATM if anyone is lingering nearby. Never engage in conversations with others around an ATM. Remain in your automobile until other ATM users have left the ATM.
- If your plastic card is captured inside of an ATM, call your card issuer immediately to report it. Sometimes you may think that your card was captured by the ATM when in reality it was later retrieved by a criminal who staged its capture. Either way, you will need to arrange for a replacement card as soon as possible.
- Ask your card issuer for a new card number if you suspect that your payment card may have been compromised at a merchant, restaurant or ATM. It’s important to change both your card number and your PIN whenever you experience a potential theft of your personal information.
- Check your card transactions frequently, using online banking and your monthly statement.
- Ask your card provider if they offer account alert technology that will deliver SMS text communications or emails to you in the event that fraudulent activity is suspected on your payment card.
- Update your address and mobile phone information for every card you have, so that you can be reached if there is ever a critical situation that requires your immediate attention.
FICO previously reported a 30 percent increase in compromised devices for 2016, compared to 2015, and a 70 percent rise in compromised cards for that period. These figures cover only card fraud occurring at physical devices, not online card fraud.
FICO works closely with banks and card issuers around the world to identify fraud trends and shut down card fraud. In addition to FICO® Card Alert Service, FICO offers the FICO® Falcon® Platform, the leading card fraud solution, which protects 2.6+ billion cards worldwide.
UK gilt issuance to be second-highest on record at almost 250 billion pounds – Reuters poll
By Andy Bruce
LONDON (Reuters) – Britain is likely to sell nearly 250 billion pounds ($347 billion) of government bonds in the coming financial year – the second-highest total on record – to help power an economic recovery from the COVID-19 pandemic, a Reuters poll of dealers showed on Tuesday.
The survey of all 15 wholesale primary dealers, or banks tasked by the government with creating a market for its bonds, pointed to gilt issuance of about 247.2 billion pounds for the 2021/22 financial year starting in April.
Such a sum marks a sharp drop from the 485.5 billion pounds of gilts that the United Kingdom Debt Management Office (DMO) plans to issue in the current 2020/21 year to finance the economic response to the COVID-19 pandemic.
Finance minister Rishi Sunak is due to deliver his budget around 1230 GMT on Wednesday, after which the DMO will publish its 2021/22 gilt issuance remit.
Sunak has said he would not rush to fix the public finances as he readies a budget, which will add more borrowing to almost 300 billion pounds of COVID-19 spending and tax cuts.
In November, the Office for Budget Responsibility (OBR) forecast borrowing in 2020/21 would reach 393.5 billion pounds, or 19% of GDP, a peacetime record. The latest official data suggests borrowing will fall below this, partly because more taxpayers than expected have opted against deferring payments to 2021/22.
The poll showed Sunak is expected to announce a budget deficit forecast for 2021/22 of 180 billion pounds, 16 billion pounds more than the OBR had predicted in November.
“Our current estimate is that the latest lockdown will ‘cost’ around 16 billion pounds in terms of additional fiscal support,” said RBC economist Cathal Kennedy.
He cited the fact that more workers are now furloughed than the OBR had assumed in November, as well as expanded support for self-employed people and business grants announced in January.
In addition to the budget deficit, the government must also refinance 79.3 billion pounds of gilts due to mature in 2021/22.
As in the current year, much of the issuance will be soaked up by the Bank of England’s asset-purchase programme, which is due to buy around 100 billion pounds of government debt during the next financial year.
The poll suggested the government will finance borrowing almost entirely through gilts in the next financial year, rather than additional issuance of T-bills or via the government’s retail investment arm.
The DMO is likely to ramp up its issuance of inflation-linked gilts in 2021/22 to around 14% of the total, compared with 7% in the current financial year, the poll showed.
The DMO reined in sales of index-linked gilts through most of 2020 due to uncertainty caused by a review into the future of the retail prices index measure of inflation, which is used to price the bonds.
“Given pent-up demand, we think that this target is achievable,” said Deutsche Bank analysts Sanjay Raja and Panos Giannopoulos.
The dealers did not expect much change in the split between short, medium and long-dated gilts. Britain already has a longer average maturity for its debt than any other major economy, but the recent jump in global bond yields has prompted some commentators to say the DMO should do more to lock in low rates.
The government has also said it will issue the first “green gilts” – bonds to finance environmentally friendly projects – in 2021/22. Most respondents expect one or two bonds to be issued, of around 10 billion pounds in total.
(Reporting by Andy Bruce, editing by Larry King)
Why local currency payments are critical to cross-border commerce success
By Nikhita Hyett, Managing Director – Europe at BlueSnap
Online shopping has been a lifeline for many during the pandemic. But with the increased volume of online orders, one area that’s been overlooked is the importance of local currency options.
As more transactions are made on mobile devices, customer service channels proliferate and social media becomes a popular sales channel, merchants around the world are closer to their customers than ever before.
But this increased proximity doesn’t always translate when customers hit the buy button.
When shopping online, I’m often shown ads from businesses who sell to me and ship to me, yet their pricing is in euros or US dollars. We hear a lot from sellers about offering a personalised customer experience in the age of e-commerce, but a failure to make the transaction feel local is holding them back.
In fact, it still surprises me how many merchants don’t offer customers the ability to pay in their local currency, even though this move could increase their conversions by an average of 12% according to BlueSnap data.
Any online business would agree that the checkout process is the most important part of the purchase journey – and should be as a simple and painless as possible.
But when presentment currencies, or the currency a customer is charged in, differs from that of their local geography, buyers are often left confused and struggling to calculate costs when making a purchase from an international seller.
This prompts shoppers to leave the checkout page to convert costs – creating a major barrier to sale at the point of conversion. Friction enters the buyer’s journey, and businesses see an increase in purchase abandonment.
Disputes and chargebacks
Even if a customer perseveres with the transaction, that’s not always the end of the story. Another major benefit of offering local currency payments is that customers are less likely to challenge the final total of cross-border transactions.
But if there’s confusion around exchange rates, customers are entitled to dispute the transaction with their bank, which can result in a lost sale in the form of a chargeback fee for the vendor.
This is a lose-lose for sellers which not only miss out on revenue due to increased purchase abandonment but also post-purchase disputes around order settlement.
If that wasn’t enough, buyers who have encountered friction in the purchase journey are unlikely to be satisfied with their experience, deterring them from making repeat purchases, recommending the business or leaving a positive review.
Brexit and cross-border fees
But going truly local extends beyond currencies and the customer experience – and can have a big impact on a company’s bottom line. In a post-Brexit world, businesses can take the localisation of their payment processes a giant leap further through local acquiring.
Following the introduction of new trading laws for cross-border sales in January, Mastercard has announced that it’s hiking interchange fees for UK merchants fivefold for all online purchases made by EU cardholders.
The increase will see interchange fees between the UK and the European Economic Area (EEA) rise from 0.3% to 1.5% – with these transactions now defined as ‘inter-regional’ – and other banks likely to follow suit.
In practice, this means UK merchants will now have to pay a higher proportion of the sale to the payments provider for enabling cross-border transactions within the EEA, and vice versa, reducing profit margins on every purchase.
At a time when retailers are already having to adapt to new regulations and Brexit ‘red tape’, they now face another unenviable choice. Absorb these increased costs or pass them on to customers by raising the price of products or services – a move that could deter future sales.
Avoiding interchange fees
But there is another way. E-commerce sellers can avoid cross-border fees altogether by routing payments through local banks in the same region as the cardholder.
By localising the transaction, it’s estimated that merchants can reduce cross-border fees from card issuers by 1% – meaning a total saving of £100,000 for every £10 million in sales.
Of course, if this were simple, the debate over cross border fees would be long over.
To process a transaction locally requires merchants to have a legal entity in each region they sell to. This used to mean that the more online business a retailer does, the more connections they need and the more complex this process becomes.
On average, international sellers have five different payment gateways to route cross-border transactions via local banks – with the costs of developing and maintaining this infrastructure able to quickly outweigh the savings of processing payments locally.
A better way
Thankfully, new technology is changing all that. With the next generation of fintechs ‘rebundling’ financial services under one roof, forward-thinking businesses are taking advantage of all-in-one solutions that automate payment routing via a network of local acquiring banks.
By harnessing innovative payments technology, which automatically recognises card types, location of issue and local currency, merchants can effectively localise any incoming payment from any customer, anywhere in the world – through a single integration.
In doing so, they’re also able to increase payment authorisation rates, as banks are more likely to approve purchases made locally.
With e-commerce experiencing its strongest growth in over a decade last year, merchants understandably want to embrace the opportunities brought about by this exciting shift in the way we buy and sell goods.
As the rise in online sales shows no sign of slowing down, those businesses that offer local currency payments can transform the customer experience and increase conversions, while merchants that embrace local acquiring will make their bottom line soar.
How the financial services industry can win with personalisation
By Lottie Namakando, Head of Paid Media, iCrossing UK
The Financial Services sector has a thin tightrope to walk between marketing investment and pay off. One misstep and consumer trust can hit the brand and bottom line hard. And that fear can paralyse. On the one hand, finances are both crucial and complicated – people need a friendly, authoritative, ideally tailored approach that speaks their language to help simplify them. On the other, there is a lot of mistrust and personalised digital communication can be seen as ‘creepy and obtrusive’. People are particularly sensitive about personalised communication when it comes to their financial information. So how can the financial services industry win with personalisation?
From customised content to tailored ads and offers, personalisation has certainly become more visible within the FSI. Indeed Accenture’s 2019 Global Financial Services Consumer Study found that one in two say they’d be happy to receive personalised financial advice from banks, like spending habit reports and advice on how to manage money. This type of guidance is likely to become even more valuable with the added pressures brought on by COVID-19. It’s clear that financial service brands are catching on.
An Econsultancy survey found that, when asked which three digital areas are top priority for their organisation, 37% of financial service respondents chose ‘targeting and personalisation’. However, another study, by software company Pegasystems, concluded that 94% of banks haven’t quite figured out personalisation yet. So what’s the holdup?
Striking the right balance
Despite the growing consumer demand for personalised interactions, in a survey of more than 2,500 customers, Gartner found that more than half would unsubscribe from a company’s communications and 38% would stop doing business with a company if they found personalisation “creepy”. Not everyone wants to feel as though they’re being monitored – particularly when it comes to their finances – and the price of getting it wrong is steep. Google also has guidelines around negative financial status in personalised advertising, so financial institutions need to tread carefully.
Keeping personalisation consistent
Paid media personalisation doesn’t seem to be the norm for any FSI brands at the moment. But when brands do start to embrace personalisation in ad copy, consistency will be key to hitting KPIs and ensuring the experience is a positive one. When a customer clicks on a personalised paid ad, for example, they’d expect to then hit a personalised landing page. Without that, the initial promise of relevancy is met with something too generic. But personalised content in the modern digital ecosystem needs to be dynamically generated – something that Google can have issues with. For any personalised landing page that isn’t behind a login, it’s important to decide what Google should see, and the answer is rarely straightforward – don’t risk a Google penalty by showing users any content that’s radically different from the non-personalised .
Cutting through the complexity
We need to reframe how we look at personalised content to win with it. Rather than seeing it as scary and new, it is crucial to remember that well executed personalisation should be an audience aid – to guide people through the complexity of the finance industry. Key to achieving this clarity that will be appreciated by audiences will be focusing on the differing needs of existing customers and prospects with ad copy personalisation. Think about the way a potential customer would be treated if they came to the bank for the first time – wait for them to sign-up and share their information before giving personalised advice.
So there’s an element of politeness which should sit alongside personalisation in the FSI, whereby people need to agree (beyond just accepting cookies) before brands can go ahead and get friendly. When approached sensitively – which is especially important in these uncertain times – personalisation will help FSI brands set themselves apart from competitors; not just other banks, but fintech start-ups too.
Personalisation projects need to be carefully considered and planned. Banks need to listen to customers. This would involve conducting consumer research on how they feel about different levels of personalisation. Do the potential benefits outweigh any concerns they have? Is there a cut-off point to their comfort?
It will by asking questions such as
- How comfortable are you with receiving personalised marketing from your bank?
- Do you see the value of personalisation in marketing for you as an individual?
- What do you feel is the right level of personalisation?
- Is there a point when you feel personalisation has gone too far?
This will give a real understanding of what level of personalisation consumers will both want and value.
However, the most important part of this whole listening process is hearing what consumers are saying, then be sure to use these insights and research to devise an audience and messaging matrix which is relevant for them and for your business. This involves defining the audience, what traits differentiate them from other personas and what level of personalisation is relevant to them.
In order to protect people’s privacy, restrictions on targeting do exist across many different paid media platforms to ensure that sensitive information is not inadvertently shared. It is prudent early on to examine the technical capabilities of the marketing platforms you wish to use, to understand if they support the personalisation strategy you have in mind. Auditing the audience targeting options and restrictions by platform is a good place to start.
Test and learn
Once the platform capabilities and the consumer base’s position on personalisation is understood, then thirdly the approach should be test and learn. Next steps are to map what signals are available to be able to target these differently defined audience groups, using platform curated audiences or 1st party audience data – and don’t go too niche with targeting.
Using this framework, ideally take one or two different audiences to start with, we recommend testing what type of messaging resonates best with them and using relevant engagement KPIs such as clickthrough rate or view rate to evaluate performance.
By comparing a version of an ad which relates specifically to the audience, versus one with a more general messaging, it’s possible to identify themes or phrases which really speaks to the target audience. The results can often be surprising, with what might be considered relevant ad copy just not landing with the consumers in the way expected. The advice here is to go with the data, not with the heart. Remembering the team is not necessarily the target audience, and whilst no result will be 100% it is the majority verdict that should be used to develop messaging.
Finally, this approach needs to be iterative – people, attitudes and needs are constantly changing. When using personalisation, the messaging needs to be constantly challenged, tested and evaluated. Just remember not to change too much at once to understand what elements are having the most impact.
Personalisation should be on the digital agenda of every financial services business. It represents a huge opportunity for growth and when done right can strengthen existing customer relationships and build trust. Although learning to walk a tightrope may be tricky, balance can be achieved only through tackling and not avoiding it.
Lottie Namakando is Head of Paid Media at iCrossing UK. iCrossing is a digital marketing agency that is driven by insight, powered by Hearst, the world’s largest independent media, entertainment and content company
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