The European Banking Authority recently released a report in July. In the ‘EBA report on the impact of FinTech on payment institutions’ and E-money institutions’ business models,’ the EBA lists a number of key challenges faced by the payment industry.
These key challenges include operational resilience and ICT security, operational capacity, regulatory framework, customer education as well as acquiring and retaining talent. In this article, I’d like to take a closer look at two of these challenges and how Mi-Pay is taking them on.
One challenge that stands out in particular, is that of operational resilience and ICT security. Security has always been and will always be a cause for concern. In the realm of eCommerce, fraudsters are quick to adapt their tactics and never stop looking for weaknesses to exploit.
Our lives have moved to the internet and so has our data. Our laptops and smartphones are treasure troves of private information. What complicates matters, is that data is shared with an increasing number of third parties. New regulations like PSD2 also play a part in this development.
The more digitally interconnected our society becomes, the larger the potential consequences of a security breach. The EBA report underscores this fact and foresees an ‘inevitable proliferation of cyber-risk in the payments industry.’
As the share of cashless payment transactions increases, protecting these transactions from prying eyes is becoming an increasingly difficult task.
Still, online businesses shouldn’t have to bear the risk of fraud. Your payment gateway provider should be confident enough to guarantee all payments. For example, Mi-Pay offers 100% fraud risk takeover. Our SaaS fraud solution includes the automated screening of online transactions, including chargeback protection. It’s also GDPR proof; data is handled properly per EU regulations.
Another aspect of the EBA report that requires close attention is customer education. The report illustrates a need for more digital and financial literacy among customers. A lack of financial literacy in the digital space can lead to one of two scenarios.
The first scenario is that innovative, forward-thinking, digitally-minded businesses are forced to launch or maintain a physical presence. The other is that less literate consumers end up excluded from participation, as innovators assert the digitally savvy market is large enough to operate in exclusively.
Consumers are not all the same. Businesses should ask themselves if and how they can better inform and educate their consumers as the industry inches forward into a fully digital environment.
At Mi-Pay, we are aware that not all consumers are equally ‘digital.’ One area in which we see this is payment collection. There are differences in literacy, financial stability, culture and these differences play a role in how a request of payment is handled. Therefore, when it comes to collecting outstanding payments, there’s no such thing as one size fits all.
In 1964, Canadian philosopher and media theorist Marshall McLuhan first coined the phrase, ‘the medium is the message.’ With it, he portends the character of the medium through which content is transmitted is more important than the content itself. It is the medium itself that influences our behaviour. In other words, if the medium is ill-suited to the recipient, the message may be lost.
We have solved this dilemma by developing a payment reminder solution that can be tailored to the preferences of any demographic. From formal letters to WhatsApp chats or complete interactive landing pages that feature multilingual instructional videos and ranging do-it-yourself payment options.
The EBA report
The EBA report is an informative read and goes far beyond the two challenges highlighted in this article. If you feel like tackling the 33-page report over the weekend, visit the European Banking Authority website. To read more about our solutions, visit our payments, top-up and reminders pages.
About the author
Joep van Doornik – Payment Solutions
I’m Joep van Doornik, Product Owner at Mi-Pay. I make sure that our services remain cutting edge.