Ring in the New: CNP Ruminations for 2013
As 2012 has given way to 2013 we at CardNotPresent.com thought it was time to turn some space over to the many constituencies that comprise our readership. The priorities, challenges and opportunities for the year ahead vary widely for the merchants taking card-not-present payments and the medley of service providers that support them. We’ve invited several of them to make predictions or pass along their thoughts about the coming year. What issues will dominate the list of concerns for those engaged in the CNP payments space? What’s in store for e-commerce and mobile payments in 2013? Our experts tell us what’s on their mind.
In 2013, there will be a massive improvement in electronic fraud detection and prevention. AVS and CVV fraud scrubbing techniques are no longer affective so our goal was to identify and develop the next generation of fraud detection and prevention measures. We’ve seen new fraud scrubbing techniques that utilize social media along with email and cell phone data validation to authenticate legitimate consumers with a near perfect track record. More importantly, we were able to use mobile geo-location for the first time to not only identify who the fraudster was but to actually direct local police where to apprehend the criminal. In my opinion, this is an evolutionary step forward to eliminating CNP fraud as it destroys the impunity that criminals have relied on to bypass the law.
-Rey Pasinli, Executive Director, Total Apps Inc.
U.S. consumers should see a steady increase in e-commerce and m-commerce merchants motivating the consumer to use specific payment card/device types to drive lower cost and increase consumer loyalty. Preferred payment campaigns will be implemented to a greater degree via surcharging and/or discounting, enhancing merchant loyalty cards and new mobile technologies. Consumers and merchants will win as distribution cost differences between the highest priced and lowest priced payment products, which are now more material than ever, will be made more transparent to the consumer at the time of purchase or negotiated into the cost.
As a result of the last two years’ changes in payments legislation, judiciary actions and technology development, I am encouraged. I believe we will see a much stronger correlation between the relative cost to consumers/merchants of certain payment types compared to the value the respective payment provides.
-Chris Priebe, Director of Treasury and Payment, Southwest Airlines
This year will be an inflection point for secure debit payments used for Internet and mobile transactions. E-commerce retailers will begin offering incentives for consumers to use their debit cards more frequently. The price difference of acceptance between debit and credit is just too great to ignore (especially with regard to non-exempt debit transactions). As consumers take advantage of the online incentives, they will demand safer and more secure debit products from issuers. Eager to please the new demands of their customers, issuers will demand new ways to secure debit for their customers and get them from providers. Everyone will win, except the “bad guys.” This virtuous circle will take time to fully develop but, in years to come, 2013 will be viewed as the year that truly kicked off things.
-Paul Tomasofsky, President, Secure Remote Payment Council
When I look ahead to 2013, mobility and simplicity are the two themes that seem to resonate. When you look at the U.S. payment market, it is still heavily dependent on credit card payments. In parallel we have become a very mobile/tablet-centered society where information is expected on the go. Where we come up short (compared to the rest of the world) is in our payment acceptance technology. By staying with mag stripe we limit our global mobility while in parallel leaving us exposed to potential fraudsters via the stripe.
Also, many mobile phone carriers have been kicking the tires on NFC technology with the most salacious rumor (again!) being that Apple is working on a form of this for an upcoming iPhone launch. This comes back to the point that we are becoming more “on the go” and soon will look for a payment vehicle that can match the instant fulfillment need.
-Peter Caparso, President – North America, Adyen Global Payment Services
The biggest opportunity in the e-commerce retail space for 2013 continues to be how we channel and harvest Big Data to continue to enhance the customer experience while gaining efficiencies and controlling the bottom line impact. We see the opportunity that Big Data presents impacting all aspects of the business and the relative initiatives (stores, e-commerce, loss prevention, multichannel, global, marketing, etc.) as the data demands from the consumer continue to grow and evolve.
Secondarily, embarking on the next level of mobile customer engagement and commerce presents our next opportunity. The digital demands the consumer continues to present to retailers leave very few options for us. We simply have to meet them to remain competitive.
-Karen Howard, Director, Multichannel Operations & Strategic Initiatives, Tractor Supply Co.
I expect smartphones and tablets to continue their growth trajectory and gain greater prominence in the payments ecosystem in 2013, which will affect card-not-present trends. First, the size of the device and nature of the touch screen key pad make purchasing online more challenging, so apps that help reduce friction and the number of key strokes necessary to make a purchase will drive greater acceptance. V.me by Visa and PayPass Wallet by MasterCard are two examples that allow consumers to enter their credit or debit card data one time, along with shipping preferences and the data is stored in the cloud. When the consumer goes to purchase online they are only required to log in to make the purchase. This model has worked well for PayPal in the online world and applications that make it easier to buy using their mobile devices will begin to gain prominence.
Second, “card near present” also will grow in 2013 as more consumers use their mobile phones to pay at the point of sale instead of swiping their credit cards. Square Wallet, Google Wallet, Isis and PayPal are all lined up to drive this trend.
-Todd Ablowitz, President, Double Diamond Group
In the coming year, we will see two major efforts in payments and fraud prevention for e-commerce and m-commerce merchants. First, is the incredible growth in mobile commerce that continues to present online retailers with challenges and opportunities for new revenue streams that need standardization and protection and the second is the pace at which new, alternative payments are being introduced to the market, domestically and internationally.
-Don Bush, Vice President, Marketing, Kount
History clearly shows that fraud does not disappear when networks mandate merchants and issuers to move to EMV; instead, it simply migrates to the CNP channel where merchants are forced to accept more of the cost of fraud. The networks have collectively failed to address e-commerce fraud and issuers are content with the situation since they collect higher CNP rates on e-commerce transactions while deferring fraud costs to merchants. In 2013 they must begin to do so.
-Mark Horwedel, CEO, Merchant Advisory Group
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