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Payment trends: Opportinty for new technology


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Payment industry is seeing huge changes and technology is going to play a big role in successful realization of these changes

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Payment trends: Opportinty for new technology

  1. 1. Emerging trends in Payments: Opportunity for new technologyFrom giving away cash to swiping cards on our mobile phones, the way we dopayments has seen significant change over time. Every wave of change hasnecessitated huge technological improvements and at times technology itself hasbrought about new waves of change in payment process. Currently we can see fewtrends emerging in payments industry that throw huge opportunities for newtechnology and pave way for innovative solutions.Outsourcing by AcquirersTraditionally issuers and acquirers have been banks that handle all the functionsfrom consumer/merchant acquisition to settlement of payments. But with increasein number of card holders/sellers and a huge increase in number of cardtransactions, banks are finding it beneficial to outsource most of the activities thatinvolve acquiring customers/merchants and setting up hardware/softwareinfrastructure for information exchange.This has led to entry of many non-bank players into the payment ecosystem. AsPayment process involves high speed data processing and enhanced data securitylevels all new entrants need efficient and robust technology solutions to automatetheir process.EMVPayments industry has always been haunted by frauds and data theft. A goodanswer to such problems is “chip based technology” which has numerousadvantages over magnetic stripes. Chips can be highly secure as these can generatedynamic data thus making real time authorization possible for each transaction.Instead of having a static personal identification number (PIN) cardholders can usea different PIN for each transaction.Currently such payments are governed by standards and specifications ofEuropayMastercardVisa (EMV). Card terminals at merchant site would needdrastic modifications in equipments and software to become EMV ready, thus anopportunity for new technology.New Payment modesPayment industry is seeing huge changes in the way consumers make payments.Portable card readers, NFC enabled mobiles, mobile wallets, contactless cards andmany such innovations make it necessary for merchants and information
  2. 2. processors to upgrade their systems to facilitate such payments. At the same timethe systems need to stay compliant to all security standards.Cloud servicesWith increase in card transactions and entry of smaller merchants, cloud paymentservices like cloud billing, invoicing and data processing services are seeingincrease in demand. Cloud can make the life easier for smaller merchants andprocessors as the burden of buying infrastructure and technology is thrown offtheir shoulders. This would lead many companies to come up with securetechnologies to provide payment services on cloud.Payments analyticsPayment is rapidly turning into a very complex process involving numerous modesof payments, multiple intermediaries and significantly high volumes. Increase incomplexity and volume has pushed up demand for analytics services.Third party business intelligence (BI) and analytics tools such as Business Objectsand Cognos have high reporting capabilities but fall behind when it comes to easewith which they can be integrated into complex payment processes. Thus there is aneed for analytical tools that handle specific issues of payment like automatic frauddetection and auto-identification of reasons for holdback and chargeback.We feel that all such trends are going to open up a plethora of opportunities fortechnology companies. Exciting days ahead for payments. Written by: Kranti Kumar Business Development Manager