Transformation of Payments – We’ve come a long way in the digital economy, and today multi-channel delivery is imperative for every business. The financial services industry is on the cusp of a Payments-Transformation revolution. Digital transformation can detect potentially fraudulent operations and minimise risks. It can also help large organisations such as banks not only to secure their business but also fight crimes.
Digital Payments Economy
How payments with the help of artificial intelligence getting smart. With the introduction of payment intelligence, this is reinventing banking. The need for fast payments created Mobile, instant, apps, internet payments. Mobile payments; the largest and the most successful banking function outside the banks for customers of today’s time.
The financial services industry is experiencing an unprecedented evolution, in large; partly due to the acceleration of digital payments. Failure to understand exactly where and how sensitive data is stored and transmitted can prevent organisations from clearly defining and implementing data protection solutions.
This can create fraud spikes in rising transaction volumes can lead to performance bottlenecks as inefficient processing limits capacity and degrades the customer experience. Velocity detection or velocity pattern analysis is very helpful in such scenarios.
Apple Pay wins more allies in Australia despite big-bank resistance. What consumer wants from their banks? This is my target in this post to share my thoughts and experiences about what FinTech institutions are doing to revamp products and services for an emerging customer base.
Banks, in particular, will need to move swiftly if they are to take advantage of the opportunities on offer in the global payments business or risk losing out to nimbler competitors. “Social sharing now has to be way more sophisticated than just putting a share button on a campaign,
Innovative means & ways of payments are opening up new opportunities for banking (Not necessarily for banks) to win valuable market share of hot cake called payments. This payments market expected to cross 4 trillion euros by 2020.
Transformation in Payments
Transformation in payments are actually explaining by real-life examples; how this technology-driven approach can help consumer’s banking needs and reach through multichannel ways, providing more convenient access to your needs for innovating products and services. While Apple battles a group of large Australian banks over terms of its mobile payments app, it has entered separate deals with ING Direct and Macquarie.
ING and Macquarie join about a dozen banks, credit unions and U.S. card brands in supporting Apple Pay in Australia, Apple has announced. But Apple has still struggled to win the support of the country’s largest Australian-based banks, which are petitioning the government to allow collective bargaining in negotiations on Apple Pay’s terms. Now the next stage of connectivity is upon us, as customers progress from choosing purchases and making payments to undertaking seamless customer-driven interactions via mobile devices.
The over-busy pace of change in payment systems – Paper, Online, Plastic, Mobile, eWallets, NFC stickers and Smartwatches, Facebook, Google Wallet, Microsoft; and many more; means that all businesses need to remain alert to the latest trends and developments.
Business and their customers will almost certainly start paying for goods and services in new ways now and in future. Innovations will continue new ways will continue to change and proliferate as time goes on. TransferWise a company for international money transfer has now made an international money transfer possible using Facebook Messenger.
The UK-based company developed a Facebook Messenger “chatbot”, or an automated program that can help users communicate with businesses and carry out tasks such as online purchases. So if you’re a TransferWise customer, you can send money – and set up rate alerts – without ever leaving the comfort of Facebook’s Messenger app. Payment is the transfer of an item of value from one party (such as a person or company) to another in exchange for the provision of goods, services or both, or to fulfil a legal obligation.
The Daily Needs – Expenditure & Payments
Payments are a daily and routine activity carried out by people in most parts of the world. These payments cover daily human requirements from transportation, food and communication. Some people transact 2-5 times in a day while some more than 20 times making them heavy users of payment systems.
More than a billion people in emerging and developing markets have cellphones but no bank accounts yet they don’t stop their contribution to payment industries, they still do their contribution each day and many low-income people store and transfer money using informal networks, but these have high transaction costs and are prone to theft.
Following in the footsteps of the Philippines and China, the government of the United Arab Emirates (UAE) and it’s Central Bank plan to provide a clear regulatory framework on the usability of Bitcoin and operations of digital currency exchanges in the near future.
Mobile money is beginning to fill this gap by offering financial services over mobile phones, from simple person-to-person transfers to more complex banking services. To date, there have been more than 100 mobile-money deployments in emerging markets; at least 84 of them originated in the past three years.
Digital payments developed futuristic banking, shared economy, personal finance and p2p lending. While Insurance tech, blockchain technology given rise to wealth management and business and consumer lending. Many regulatory bodies do not recognize virtual Currency(s) across the globe.
Payment Programs, Promotions & Data
Exceptions are made to a digital unit that: a) can be redeemed for goods, services, and discounts as part of a user loyalty or rewards program with the Issuer and; b) cannot be converted into a fiat /virtual currency.” Mobile devices and messaging are the strongest ‘two factors’ for identification. According to Juniper Research, the total value of digital payments reached $3.66 trillion in 2016, up 20% over 2015.
With mobile devices the predominate vehicle on which those digital transactions will be carried out, stronger authentication models must be put in place now to enable faster payments in real time, eliminate the processing lag and ensure the trustworthiness of any device transacting with an organization.
Payment processors or acquirers are the financial institutions that work in the background to provide all the payment processing services used by an online merchant. These companies usually have partnerships with other companies that directly deal with consumers or merchants.
Mobile Payments are an easy and simple concept but sometimes they get oversimplified along with the same reasons for payments under mobile or simplified version as mobile payments about which every single company on this earth is talking about these days and it is true every single company is.
The assumption made here is that the reader is well versed in mobile payments through the mobile wallet or mobile money that is a solution that lets people conduct banking transactions with ease, directly from their mobile device in a secure and convenient manner.
Security, Risk and Frauds in Payments
Money flow encapsulated with payments tag got into digital money risk issues. The money went from tangible item to bits and bytes so the stealing method. The solution may be found in the actual device from where payment is being made. It can be embedded as messaging technology.
As the prevalence of app payments has risen so has the attention from would-be fraudsters. Having a full understanding of the business case and technologies we can now get ideas on how to merge these to gain some cost reduction, increase in speed and effectiveness.
“If we had a Ministry of Innovation for regulation and control on a global level, they would have made today’s work and innovation impossible.”
Apple in 2014 (as per news 10 Million handsets were sold in first 3 days of launch) launched Apple Pay (NFC Solution) from a technology perspective was neither a new offering nor a game changer, which is now followed by almost every big player in the industry.
MasterCard even claims that, under the banners of convenience and security, their technology will create a world in which we will one day never even think to withdraw money from an ATM or stand in line to buy a train ticket. Instead, we’ll just tap a button.
How ‘consumer pattern recognition’, which effectively triangulates the position of a consumer by pinning them, their device and how they input their information is emerging as a technology, which, after the first transaction, reduces fraud to almost zero. Without a doubt, that launch was to set a trend for NBC (Non-Banking Financial & Technology companies) on how to enter into payments and did its job well, so-called banking domain and eat the share.
Technological innovations have made certain aspects of our daily living that much easier. The advent of mobile money has awarded those who were previously unable to conduct monetary transactions an easy and affordable alternative to traditional bank accounts.
Financial Services Transformation
may or may not link to your mobile wallet or directly to your bank account. This stage of connectivity is driving digital payments transformation – the migration of cash payments and plastic card payments to payments made over digital channels, either from dematerialized cards held on digital wallets or in the cloud or from new digital payment mechanisms. Important questions being;
- How to position a Mobile Payments Portfolio to my consumers?
- What my consumer wants?
- How my consumer wants it?
- How much and when my consumer needs?
- Was the emergence of payment facilities that reveal payee account names?
Not just account numbers and sort codes, to bolster user confidence, ‘request repay functions’ that eliminates the need for separate invoices for B2B transactions, and how real-time transfers of funds, even across national borders, from banks to customers, is upon us.
Many companies including some payment processors and most payment gateways provide merchant accounts. These accounts can also be opened with some large banks that provide such services.
In most cases, Independent sales organisations (ISOs) or Member Service Provider (MSP) provide these accounts. These organisations have agreements with payment processors to provide such merchant services. In addition to this, Independent contractors or Agents of ISOs also provide Merchant accounts.
Mobile Payment Services
Just like a physical point of sales terminal at your bricks and mortar retail store, the Payment Gateway authorises you to take card payments directly from your website.
In a scenario, if there is no mobile wallet and money is pulled directly from a soft card or bank account every time a transaction happens. The payment gateway acts as a mediator between the transactions that take place on your website and the payment processor.
This is needed because it is prohibited, due to security reasons, to transmit transaction information directly from your website to a payment processor. New specifications and use cases on interface level are being released for mobile payments adoption and implementation continue to increase.
According to survey data from Google, there are currently over one billion NFC-enabled devices and the almost same number of 3G POS machines now in the global marketplace, expected to be 2 billion in the market by the end of 2016.
Benefits that can be offered are customer loyalty points or some discounted coupon and that creates a direct relationship between consumer and merchant to offer a seamless way to purchase right from their mobile device. This process not only ensures spending for that particular merchant but also locking the consumer on his account, gets spending habits and taste.
Transformation of Payments with AI
Some Payment Processors do provide direct merchant services, but most companies focus on processing payments. Experts agree that mobile-driven loyalty will be critical in garnering consumer adoption of mobile payments through apps, USSD, SMS, NFC, GPRS or QR Code.
Fortunately, the rest of the payment industry players who were not part of the initial painful experiments have the unique opportunity to learn from the growing pains and avoid making the same costly mistakes as one mistake could make them miss the opportunity to convert an occasional customer into a regular loyal customer. A payment gateway is your doorway to making sales online. A Payment gateway will allow you to charge your customer’s credit/debit card with the purchase he/she makes online.
We can be certain about this for sure as migration is happening to transform the analogue economy into the digital economy. It explains why mobile and digital payments are now a white-hot topic, attracting significant investments and innovation, often backed by private equity and venture capital. Payment processors make reselling agreements with Payment gateways or Merchant account providers in order to provide their services directly to Internet merchants.
Points to Note:
All credits if any remains on the original contributor only. We have covered all basics around adapting cashless payment models. The importance of such a quality system with full of big data are the backbone of any digital economy. In the next upcoming post will talk about implementation, usage and practice experience for markets.
Books + Other readings Referred
- Research through open internet, news portals, white papers and imparted knowledge via live conferences & lectures.
- Lab and hands-on experience of @AILabPage (Self-taught learners group) members.
Feedback & Further Question
Do you have any questions about AI, Machine Learning, Telecom billing/charging, Data Science or Big Data Analytics? Leave a question in a comment section or ask via email. Will try best to answer it.
Conclusion – Today’s consumer expects a seamless mobile payment experience; failing to meet those expectations can be devastating to a brand, idea, innovation and eventually the payments industry. Accenture’s analysis shows that cash and card payments total about three trillion transactions a year globally, worth around US$13 trillion in aggregate. How many of these payments will move to digital and how quickly; is anyone guessing.
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Thats the way ….. Improvement is needed but in correct order …… solutions should followed by problems not the other way around.
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This is the best write up I have ever red on topic