Authored by TM Praveen, CEO, Opus Consulting Solutions
Technology has simplified various aspects of our lives, now we can add the payments industry to this list as well. The payments industry is undergoing a massive change, driven mainly by technology, and the biggest beneficiary of this change is the customer. The significant use of technology in the payments industry has created a whole new world of experience. Thanks to the various innovations, we no longer have to carry cash around with us to buy the things we need. We essentially need to make space in our wallets for some plastic money, or better yet, none at all, if we have our smartphones with us, we sometime don’t even require our cards. Technology is aiding the progress of developing markets in shifting the payment ecosystem from being a commoditized offering to now offering extremely useful solutions. State-of-the-art techniques and new fintech players in the finance ecosystem are accelerating the growth of the payments landscape. Nextgen payment processing technologies are enabling fresh opportunities to revolutionize the entire way this industry functions.
Digital payments started picking up pace with the advent of e-commerce companies, which was then followed by the rise of digital wallet options. In fact, talking about India, from being a cash-dominant economy, India’s digital payment story is ambitious and backed by progressive regulatory policies and increased use of mobile internet. The Indian payment industry is going through a transformational phase. The Worldline India report for the first quarter of this year reveals that the digital payments industry is growing steadily; for example, the total volume of UPI transactions for this quarter was 2.1 billion, a 328 percent rise from the first quarter of 2018. In terms of value, transactions increased by 495 percent, clocking Rs 3.5 trillion.
In order to achieve fast and frictionless payments, it is important to also ensure that frauds don’t get in the way. This is being made possible through innovative fraud solutions that leverage machine learning. These solutions essentially study various risk factors involved in the transactions that are processed without compromising on the customer experience. Several threats that have been a cause of concern for the traditional payment system, coupled with new technologies, has led to the development of Newgen Payment Processing Technologies that are much more secure. Here are a few:
EMV Credit Cards - Also called Chip-and-PIN cards
EMV is an acronym for Europay Mastercard and Visa. EMV chip technology is the latest global standard for card payments. These cards are payment cards with enhanced safety features. These cards store your data on a microprocessor chip embedded in the card making it impossible for fraudsters to copy your original data from your card.
Contactless RFID Credit Cards
These cards use a contactless technology through a contactless chip and radio frequency (RFID) antenna. With a contactless card, there’s no need to swipe, sign, or dip. All you need to do is wave your card over the terminal, and your card uses radio frequencies and an OTP to complete the transaction.
This is the era of doing things ‘on the go’ and hence mobile wallets are ruling all over. This technology works on NFC supported smartphones. Owing to the advantages, not only tech savvy millennials, but also laymen are choosing mobile wallets as a preferred method of payment all over the world. According to a study conducted by Juniper Research, the mobile wallet user base could touch 4 billion users by 2024 from the present 2.3 billion. This rapid increase in the number of people making payments through mobile devices such as smartphones and tablets has also led to the increase of risk of attack like relay attacks. Currently, there are three principal architectures that endorse a next-generation solution to secure mobile payment.
Changes taking place in the payments industry thanks to technology advancements are at its peak, and will only get more rapid. The Payments industry is being governed by powerful margins, state-of-the-art technology and stringent guidelines, and is constantly improving due to globalization and rapidly growing online marketplaces. For all those banks, credit card companies and new entrants who are up for the challenge, the future holds great opportunities. Investors are pouring millions into ground breaking financial technologies like Blockchain thereby resulting in next generation payment methods. We believe the fintech revolution we are witnessing is in fact a once-in-a-generation kind of a shift, and definitely promises a further enhancement of the overall payments experience in the coming years.