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As technology advances in smartphones and e-wallets; purchase patterns change, and demand for cross-border multi-currency electronic payments increase, providers are under pressure to provide peer-to-peer payments beyond traditional banking models.
Mobile payments, e-wallets, and contactless cards have already simplified the business-to-business and business-to-customer experiences. These demands create technical challenges for processors, users, and merchants.
Listed below are the main challenges in online payments and the solutions to overcome them.
Fraud and chargebacks
With e-commerce expanding, opportunities for fraudulent misuse of payment networks and data theft are growing as well. In addition to tools like customer accounts, validation services, and purchase tracking, a certified Level 1 Payment Card Industry Data Security Standards (PCI DSS) risk management staff can prevent frauds from happening.
Chargebacks can damage business reputations. Use of customer service practices based on merchant accessibility and know-your-customer principles can reduce or eliminate chargebacks.
New technologies such as fingerprint recognition and EMV are also being used by PSPs to chargebacks and reduce fraud.
Even in online payments, EMV provides a degree of security as it is much harder to clone. Biometric identification, a common feature in many smartphones today, is being introduced to increase mobile payment security and prevent fraud. This technology is being implemented by Google Play, assuring users of Android smartphones with built-in fingerprint scanners to authenticate Google Play purchases using their fingerprints.
Check out: Top Payment and Card Solution Companies
Cross-border payments have a crucial role in global trade. Most national banking infrastructures aren't built for cross-border payments which result in non-uniform development in technologies and software platforms that can be slow, inefficient, and expensive. New developments such as emerging transnational systems, government-led initiatives and multinationals achieving economies of scale are beginning to shape cross-border payment requirements and will increase efficiency and bring down costs.
Card data security
Any online or offline business accepting credit or debit cards require PCI DSS certification. This requires merchants and processors to meet 12 security criteria with emphasis on maintaining a secure network and systems, protecting cardholder data, maintaining a vulnerability management program, implementing strong access control measures, regular testing of networks, and maintaining an information security policy. Acquiring a PCI DSS Level 1 certification or using a PSP-hosted payment page can prevent online payment security issues for any online business.
Online payment systems are run across hardware and software platforms. Credit card-affiliated payment processors, although secure, are expensive for online retailers. The lack of interface between processing systems adds to the challenge. Difficulties in linking PSP with other systems will lead to payment delays, lost transactions, and expensive fees.