Ongoing Trends In Payment Digitization And Security

Fatihah Ramzi, DigitalCFO Asia | 19 July 2022

Interviewer: Qinthara Fasya, Assistant Editor, DigitalCFO Asia; Interviewees: Douglas Wolfson, Senior Director, APAC Sales; and Dalbir Sahota, Senior Director of Product Management, Bankers Almanac Payments & FC KYC

The payments industry transitioned into an evolutionary, COVID-19-sparked payment era in 2021, which is stimulating even more digital growth and drawing tech-expert ecosystem players. Payments have become a supporting role that is integrated and hidden as part of this phase, allowing customers to have an engaging, seamless, and frictionless experience.

But with the acceleration of payment digitization, is there enough emphasis placed on payments security and are companies truly understanding the weight of having a forward payments system in today’s environment? 

Qinthara Fasya, Assistant Editor, DigitalCFO Asia spoke with Douglas Wolfson, Senior Director, APAC Sales and Dalbir Sahota, Senior Director of Product Management, Bankers Almanac Payments & FC KYC in a physical interview setting to gain a deeper understanding of the topic as well as to provide a business perspective on digitizing payments. 

Evolution Of Payment Digitization In Pre, During And Post Covid

Digitization was already happening pre-covid; people were using online bank accounts to make transfers, online merchant sites to make purchases but covid really accelerated that because of an unprecedented increase in online orders. 

This is because many people could not physically head in to stores or banks to make purchases or do their payments. Now that covid is ending, it has accelerated even further because people have found a convenience in it and they want to be able to continue using things that are convenient. 

Being More Mindful Of Frictionless Payments

Frictionless payments are essential. Whether it is someone using their bank online to make a payment or if they are on a merchant site making a purchase, nobody wants to be sitting around waiting for that transaction to go through. 

“If a customer has to wait, they are going to leave. It doesn’t matter what the transaction is, nobody is willing to sit there for 30 seconds for it to go through. So it is absolutely essential that the payment happens as soon as they click the button,” says Douglas Wolfson, Senior Director, APAC Sales.

Ensuring Safety In Payments Without Compromising Customer Experience

There are 3 key parts of ensuring safety and payments, the first is making sure the payments are going where it is supposed to, the second is checking to make sure that no criminals are involved in the payments and the third is to make sure that no activities like fraud are involved in that transaction. 

By front loading the 3 key parts mentioned above, a process called security by design is used to ensure that all of it happens seamlessly. The customer does not even know it is happening while the transaction is occurring – it can occur in milliseconds and the transaction is done. They do not have to worry at some future point that the transaction will be rejected. The transaction will go through and the process is complete. 

The True Cost Of Failed Payments

“In a research that was done on failed payments, there was a $118 Billion associated with failed payments,” commented Dalbir Sahota, Senior Director of Product Management, Bankers Almanac Payments & FC KYC. 

To put that into context, that is equivalent to a country’s GDP in central Europe. The $118 billion of failed payments is not the true cost because it is significantly difficult to quantify the true cost of failed payments as there could be multiple reasons that are stopping consumers from even using the merchant site.

In merchant aspects of payment journeys, many consumers have given feedback around drop-off points. The drop-off rates do not get accounted for in the true cost of payments. Also, just having a bad experience on a payments journey has knock-on effects on word-of-mouth; customers will not recommend the merchant sites to their family and friends and bad reviews will eventually travel. These will not be accounted for in the true cost of failed payments as there is no way to track these people. 

Internal Financing: Precautions CFOs Must Take

Investments into processes to make the payment journeys effective and efficient whether that is in terms of paying suppliers, employees or receiving payments inbound as well as investing in merchant technologies for incoming payments. Secondly, technology transformation is a great investment opportunity for the future. 

So companies need to think about opportunities for growth this year, next year and beyond. Thirdly, businesses should definitely invest in buy-now-pay-later schemes because there has been exponential growth, during and post-covid. So that is definitely an area that CFOs should be looking into as part of their ambition. 

Trends In The Financial Service Industry 

The first trend that business should definitely take note of is crypto, specifically payment rails that are associated with crypto. 

“It is a new way to pay and we have not seen a greater applicability of that across the marketplace whether it be in financial services, retail or e-commerce,” says Dalbir Sahota, Senior Director of Product Management, Bankers Almanac Payments & FC KYC. 

A second area to keep an eye on is the changes circulating the way businesses work. The gig economy is changing and it affects the way people are getting paid. No longer is there a fixed day which people are getting paid on. Now, people can get paid weekly or even daily. A third area to look out for is payment analytics and the spending patterns of consumers or customers in the entire ecosystem. 

By leveraging the success of frictionless payments, new-age companies are making headway in taking the lead in this era. Firms may only realize their full market potential by adopting new payment business models and open ecosystems in the new era, which necessitates collaboration and platformification. 

Data prowess and improved payment processing capabilities will be required to succeed in the future. Traditional payment corporations are running out of time because their competitive edge isn’t guaranteed indefinitely. Companies must adapt and adjust in order to create a new chapter in the present payments landscape with all of these 2022 payment trends in action.