Ralf Gladis (CompuTop): “An NFC signal will be good enough to process mobile payments with Google Pay, Apple Pay and other mobile banking apps”

Ralf Gladis

We will see the rise of biometric authentication. MasterCard already announced to require issuers to provide biometric authentication to card holders. While biometrics will provide security as well as convenience European merchants will focus on old school payment methods like direct debit and open invoice in order to avoid PSD2 two factor authentication damaging their conversion rate.

What will be the key drivers of B2C mobile payments in 2019?

IoT is the main driver. As it gains momentum, near-field-communication will allow ‚things‘ to be transactional and run payments. An NFC signal will be good enough to process mobile payments with Google Pay, Apple Pay and other mobile banking apps. Adoption will be slow because of security concerns but we will gradually see more  “things” running payments which will become more and more invisible. We are entering the world of ‚silent payments‘.

Providing both convenience and security will be an issue this year. We will see an heavy increase of NFC payments. Card transactions are overtaking cash as the most popular form of payment in the UK and more countries but – after all those years – the challenge for merchants will still be delivering omnichannel experience and payment like order in-store, return in-store or ship from store.

In 2019 it will still be early stages but yes, increasingly so. Customers look for quick, convenient and secure ways to buy and these technology trends play to that. In IoT NFC payments will rule and merchants and manufacturers will adopt NFC technology. And mobility providers like taxi or carsharing services will focus on running payments silently while at the same time PSD2 requires two factor authentication. It’ll be interesting to see the outcome of those two competing concepts.

In 2019 the next stage of PSD2 new safety requirements such as Strong Customer Authentication, Risk Based Authentication impacting merchants and payment providers will come into effect. Could you share your perspective how this will impact commerce, customer experience and conversion rates? 

Two-Factor-Authentication (2FA) will start with PSD2 RTS (retail technical standards) stepping into power in September. Merchants should find ways now to convince their customers to put them on the 2FA whitelists in order to avoid repeated authentication when customers pay for an order. One solution to avoid 2FA friction is SEPA direct debit and payment on invoice in Germany, Austria and Switzerland. Given the potential friction involved with 2FA we will see a huge take-up of biometrics by consumers, banks and merchants not only for payments but also for all other use cases where biometrics can replace passwords.

Given the huge data breaches in retail and hospitality protecting sensible consumer data is a key security issue 2019. Therefore, more and more retailers will replace old POS terminals with modern devices that provide point-to-point-encryption (P2PE). Moreover, biometric authorisation will pick up pace in 2019. Fingerprint recognition is being integrated into payment transactions which makes the customer experience seamless. We can also expect to see a rise in voice commerce and facial recognition for payments. Customers are already using Alexa to order their online shopping but the additional authentication that is needed under the new rules, will ensure that the system cannot be abused or confused by the wrong voice. Facial recognition too is very likely to become part of the automated payment experience. Pilot schemes have already been carried out, for example, the MasterCard Identity Check, commonly known as ‘pay by selfie’, where a payment can be authorised by the customer by taking a photo of themselves with their smartphone. The photo is compared with a comparison image and if the two pictures correspond the transaction goes ahead. We envision a time when an intermediary app to facilitate such a payment process is no longer needed in the retail environment.

Can you give us an update on what you’re currently working on in the area of merchant payments?

Given the rising demand for marketplace payment we integrated a marketplace solution covering all aspects from KYC, AML to API and backoffice applications for debtor management and reconciliation. Another focus is the shift from rule based fraud prevention to machine learning and self learning algorithms. What some already call “artificial intelligence” is in fact a transaction-based calculation of probabilities. Each transaction thus receives a score of its fraud probability. Additional security is provided by the 3D Secure 2.0 check, which performs further analyses based on a large amount of data to identify cases of fraud. Moreover, we now run our own FIDO compliant biometric solution in order to improve security and convenience of payments and – on top of that – to replace passwords with fingerprint, face ID or voice recognition for any login procedure far beyond payments.

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ECN Team
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