Yuval Ziv, COO at payments technologies provider SafeCharge, takes a look at some of the payment trends and challenges which companies trading online in 2015 will face and how to combat them.
The payments world is rapidly advancing technologically and globally, giving rise to many future payment possibilities for users and similarly allowing merchants to attract and connect with others around the world. It is now possible for a user to make payments on the move via mobile devices, enjoy access to multiple payment methods and currency options and feel secure in the knowledge that their sensitive data is protected due to new tools being developed to combat fraudulent activity.
Localisation of payments. A borderless world gives rise to countless global payment opportunities. By introducing multiple alternative payment methods and currencies, merchants are able to increase their global presence. What is key for merchants is the management of currencies and enabling their end-users to pay / checkout and withdraw funds globally. An example is the current economic situation in Russia where the Rouble has hit an all-time low. A merchant operating in Russia has a number of expenses which needs to be settled in Roubles, however if the merchant is paid out in Dollars, a second conversion to Roubles will result in a loss due to currency fluctuations. A merchant that uses the expertise of a payments provider partner will be able to make use of a few currency features; Dynamic Currency Conversion (DCC) offered within the payment page allows the merchant to select his preferable currency, and the settlement feature which gives a merchant the opportunity to settle in like for like currency, i.e. Rouble to Rouble, therefore not needing to depend on currency changes. These features enable merchants to reduce their risk to currency exposure.
Mobile payments. Paying via mobile is not new, however more advanced tools for mobile payments have recently been introduced making online payments easier and simpler. These new payment tools lead to a higher conversion rate. Mobile hackers have become a new threat and although not yet particularly sophisticated, it will only be a matter of time before systems are cracked and sensitive data compromised.
Identifying and combatting new fraud trends. A number of fraud trends can be identified;
Identity Fraud – Recently new fraudulent trends have been identified. There is a growing occurrence of users in some countries obtaining credit cards from the US illegally. They then use multiple cards and rack up high amount transactions. Another case is when stolen credit cards from the US pass complete authentication for 3D Secure.
Fraud Rings – Fraud rings are increasingly prevalent, and especially in online poker as there is the opportunity for a group of fraudulent players to collude together to defraud a legitimate player, or for a group to launder stolen credit card funds onto a genuine credit card or into an anonymous e-Wallet.
Fingerprint activation – The more advanced technology is becoming the trickier it gets for a hacker to gain access to sensitive information. Today, it is possible to make payments via digital devices but specifically mobile payments is being highlighted. There are a number of new mobile payment technologies on the market such as the simple touch of a finger that enables transactions to take place. There are many fraudsters that will try and obtain sensitive card data and this is definitely going to be a space to watch as it will not be long before a solution is found to crack even these hi-tech security measures.
Combatting Fraudulent Activity
Online retailers will need to become more sophisticated in 2015 to beat the fraudsters. There are Techniques like Dynamic 3D Secure available which allow payment service providers to manage a 3D Secure flow for suspicious orders based on multiple criteria in a rules engine in real-time. Merchants’ risk of chargebacks and fraud are minimised, and risky transactions are converted into payments instead of automatic rejection during the fraud screening flow. In the past Merchants were choosing to not implement 3D secure as it reduced conversion rates. End users would simply grow impatient while waiting for 3D Secure authorization from MasterCard/VISA and abandon their transaction. With Managed 3D secure, payment services providers are now capable of knowing when to activate or deactivate 3D Secure and combine smart routing to reduce risk and increase conversions.
The introduction of 3D Secure 2.0 in 2015 will see a move away from user passwords to authorise online purchases. Initially it will use tokenisation, and then secure biometrics. Faster to use and harder to hack, this new version of 3D Secure provides a combination of speed and security that will shift the balance of risk more in favour of the merchant. Users flagged as suspicious should be given an option to pay via a secured flow, and if authentication has been successfully completed, then the third party accepts these transactions as legitimate and ensures a liability shift in a case of chargeback. It’s a tough world out there, merchants need to protect themselves as best they can.
UK’s Sunak says public finances won’t be fixed overnight
By William Schomberg and David Milliken
LONDON (Reuters) – British finance minister Rishi Sunak said on Sunday he would not rush to fix the public finances as he readied a budget plan which will pile more borrowing on top of almost 300 billion pounds ($418 billion) of COVID-19 spending and tax cuts.
Sunak, who is due to deliver his budget to parliament on Wednesday, promised to help the UK economy through a gradual lifting of lockdown measures that will last at least until late June. But he also said he would “level with people” about how Britain’s 2.1 trillion-pound debt pile would carry on growing without action.
“This is not something that’s going to happen overnight. Given the scale of the shock we’ve experienced, the scale of the damage, this is going to take time to fix,” Sunak told Sky News on Sunday.
“But it’s important … to also have strong public finances over time.”
Sunak declined to comment on specific tax moves – including a widely reported plan to raise corporation tax – ahead of his budget speech.
He also would not say if he would stick to his Conservative Party’s promises made in 2019 – before the pandemic – not to raise the rates of income tax, value-added tax or national insurance contributions, the biggest sources of tax revenue.
The Sunday Times said Sunak was planning to raise income tax revenues by 6 billion pounds by freezing the point at which people start paying the basic rate of income tax and the threshold at which they begin paying the higher rate.
Britain has suffered the biggest COVID-19 death toll in Europe and the heaviest economic shock among big rich countries, according to the headline measures of official data.
In response, Sunak has racked up the country’s biggest ever peacetime budget deficit to protect jobs and help businesses, and to increase funding for health and other services.
“We went big, we went early, and there’s more to come and people should feel reassured by that,” Sunak told BBC television.
Businesses such as shops, bars, clubs, hotels, restaurants, gyms and hair salons will be offered 5 billion pounds of additional grants, the government said on Saturday.
BORROWING COSTS EDGE UP
But Sunak also raised the prospect of a fiscal reckoning to prepare Britain for future economic shocks and he noted a recent rise in the cost of borrowing from record lows as debt markets worldwide price in more inflation from the global stimulus push.
“Interest rates have been at very low levels, which does allow us to afford slightly higher debt levels,” he said.
“But that can always change and we’re seeing that in the last few weeks,” he said. “We have to be acute to that possibility.”
The opposition Labour Party said Sunak was already putting pressure on local authorities to increase taxes.
“We are an outlier both in terms of having had the worst economic crisis of any major economy but now also in having a government that seems to be focused on increasing tax right now on families when other countries have focused on securing the recovery,” its finance spokeswoman Anneliese Dodds said.
(Reporting by William Schomberg; Writing by David Milliken; Editing by Susan Fenton)
Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT
(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.
Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”
UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.
“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.
The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.
He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.
Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.
(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)
G20 promises no let-up in stimulus, sees tax deal by summer
By Gavin Jones and Jan Strupczewski
ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.
The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.
“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.
The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.
The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.
The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.
U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.
“GIANT STEP FORWARD”
The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.
Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.
“This is a giant step forward,” Scholz said.
Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.
The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.
On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.
“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.
Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.
The issue will be discussed at the next meeting, Franco said.
(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)
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