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Payments technology firm NCR launched a set of new digital-related consulting services for its clients in the financial services, retail, and hospitality industries, according to Finextra.
The new services focus on three areas — “transaction processing for digital and payments enablement,” advanced data analytics and modeling services for fraud prevention, and omnichannel integration services — according to Mobile Payments Today.
The consulting services reflect NCR customers’ growing need for digital enablement. Five years ago, 76% and 25% of merchants accepted payments via website and mobile, respectively. Those numbers have since increased to 89% and 65%. And a study from ACI indicated that about 71 out of 100 surveyed global merchants had implemented or had plans to implement an omnichannel payments solution. As that number continues to grow, NCR will have a wide addressable base for its omnichannel integration services.
The fraud-prevention services in particular may be valuable to NCR's customers. Fraud is an always-growing threat for e- and m-commerce, with the cost per dollar of fraud growing 9% year over year (YoY) for online channels and 12% for mobile channels, according to a LexisNexis study released this year. That's compared with just 3% for physical channels. Better fraud prevention mechanisms and data analytics could help prevent some of that fraud and therefore keep merchant costs low.
Bolstering these offerings could help the firm continue growing its software and services segment as the industry transforms. NCR hasn’t specified the way its consulting services will be provided to eligible merchants. But if they come with an additional cost, it could help boost the firm’s growing software and services segments, which account for 63% of the firm’s revenue and grew 3% and 8%, respectively, YoY in Q2 2016. Helping grow these segments will help the firm keep up with competition and maintain its strong positioning as the hardware ecosystem becomes increasingly digital-oriented.
Fraud cost U.S. retailers approximately $32 billion in 2014, up from $23 billion just one year earlier. To solve the card fraud problem across in-store, online, and mobile payments, payment companies and merchants are implementing new payment protocols that could finally help mitigate fraud.
John Heggestuen, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on payment security that looks at how the dynamics of fraud are shifting across in-store and online channels and explains the top new types of security that are gaining traction across each of these channels, including on Apple Pay.
Here are some of the key takeaways from the report:
EMV cards are being rolled out with an embedded microchip for added security. The microchip carries out real-time risk assessments on a person's card purchase activity based on the card user's profile. The chip also generates dynamic cryptograms when the card is inserted into a payment terminal. Because these cryptograms change with every purchase, it makes it difficult for fraudsters to make counterfeit cards that can be used for in-store transactions.
To bolster security throughout the payments chain encryption of payments data is being widely implemented. Encryption degrades valuable data by using an algorithm to translate card numbers into new values. This makes it difficult for fraudsters to harvest the payments data for use in future transactions.
Point-to-point encryption is the most tightly defined form of payments encryption. In this scheme, sensitive payment data is encrypted from the point of capture at the payments terminal all the way through to the gateway or acquirer. This makes it much more difficult for fraudsters to harvest usable data from transactions in stores and online.
Tokenization increases the security of transactions made online and in stores. Tokenization schemes assign a random value to payment data, making it effectively impossible for hackers to access the sensitive data from the token itself. Tokens are often "multiuse," meaning merchants don't have to force consumers to re-enter their payment details. Apple Pay uses an emerging form of tokenization.
3D Secure is an imperfect answer to user authentication online. One difficulty in fighting online fraud is that it is hard to tell whether the person using card data is actually the cardholder. 3D Secure adds a level of user authentication by requiring the customer to enter a passcode or biometric data in addition to payment data to complete a transaction online. Merchants who implement 3D Secure risk higher shopping-cart abandonment.
In full, the report:
Assesses the fraud cost to US retailers and how that fraud is expected to shift in coming years
Provides 5 high-level explanations of the top payment security protocols
Includes 7 infographics illustrating what the transaction flow looks like when each type of security is implemented.
Analyzes the strengths and weakness of each payment security protocol and the reasons why particular protocols are being put in place at different types of merchants.
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