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Tuesday, November 23, 2021

Experts link new tech, new threats

Expectations of robust holiday spending have prompted reminders from security analysts, service providers and financial institutions about secure shopping in stores, online and with mobile apps. In addition to the usual threats of phishing, malware, identity theft and compromised log-in credentials, experts have identified new threats stemming from emerging payment technologies and discussed ways to safeguard payments while also making them more convenient for shoppers.

Cross-border payments

Sam Ranieri, founder and CEO at Reach, mentioned that early cross-border solutions redirected ecommerce shoppers to payment pages, typically a less secure, less seamless approach than API-driven models. "The premise of cross-border used to be accommodating the international shopper," he said. "Today, we need [to treat] international shoppers as if they're local and give them the same user experience as if they were buying [a product or service] down the street."

Delivering the same shopper experience, regardless of whether you're international, cross-border or domestic, inspires trust and improves conversion rates, Ranieri said when explaining why redirecting shoppers to different pages negatively impacts conversions. "Number one, the shopper may leave the site and the merchant will lose analytics and data critical to catering property to the shopper," he said. "The second thing is that the merchants is offloading everything to another player to handle that sale, right from site while creating quite a bit of friction for that shopper."

Yaron Hazan, vice president of regulatory affairs of ThetaRay, pointed out that risk-averse financial institutions could miss out on cross-border payment revenues during the holiday season, especially when up to 10 banks share a single transaction. "Banks are afraid of money laundering, so they stay away," he said. "Advanced technologies improve clarity and transparency about these transactions."

Buy now, pay later

Global popularity of buy now, pay later schemes has also created soft targets for fraudsters, stated Kevin Gosschalk, founder and CEO at Arkose Labs, in a Nov. 18, 2021, interview with CNBC reporter Ryan Browne. Fast growing, early stage fintechs tend to have lower controls than large financial institutions, which makes them good targets for fraudsters, Gosschalk said.

In a Nov. 18, 2019, blog post, titled, "'Criminals love buy now, pay later': How fraudsters exploit popular interest-free payment plans," Browne noted how BNPL fraud impacts large and small players in the space, even Klarna and Affirm. Providers are especially vulnerable during the application process, where criminal gangs frequently lurk undetected, he added.

"BNPL products let shoppers split the cost of their purchases over three or four months, often interest-free," Browne wrote. "They've become massively popular in the U.S. and Europe, and generated almost $100 billion in transactions globally in 2020 alone."

Financial inclusion

ThetaRay's Hazan noted the Financial Action Task Force has been setting standards and best practices for anti-money laundering since 1990, and offers 40 recommendations to help governments, enforcement agencies, banks and financial service providers create controls that foster financial inclusion and economic growth. This is especially critical in the post-pandemic economy, when we are all operating digitally, he stated.

Hazan went on to say that ThetaRay offers subscription-based services that help small enterprises and global banks evaluate customers. Through the use of algorithms and advanced technologies, financial institutions can create a customer profile, even with individuals who are not their customers, he stated. This can help them evaluate risk and identify suspicious behaviors, even in cryptocurrency transactions he added.

"Cryptocurrencies have been around for years and are becoming part of the normal economy," Hazan said. "Some of the world's largest institutions and card brands are looking for ways to use cryptocurrencies in an ongoing basis. Blockchain transactions can improve transparency and accountability by tracing every transaction's origin and ownership." end of article

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