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CHARACTERISTICS OF A SUCCESSFUL PAYMENT METHOD: SECURITY
liability rules ought to be established as part of a framework of payment method rules, which should be designed to treat all stakeholders within the payments ecosystem fairly within its governance structure. Additionally, clear incentives are needed for all stakeholders to equally focus on fraud reduction; if one party can easily pass off fraud liability then there is more incentive for them to shift the blame than there is to solve the problem. 4. Push or Pull Environment Considerations Payment card systems are typically “pull” transactions whereby the merchant pulls funds from the cardholder’s bank account using information contained within the payment card to pay for goods and services. This opens the card system up to certain types of fraud, including counterfeit cards, lost or stolen card fraud and card on file/data breaches. However, many payment systems around the world work via “push” transactions, whereby the payer (i.e., the consumer) pushes funds to the payee (i.e., the merchant) by sharing the bank account credentials from which they’ll be originating the funds. Push transactions therefore tend towards fraud considerations, including identity theft and phishing attacks/scams, and can also be Fraud is not static, as both fraudsters and fraud fighters change their patterns and become more sophisticated over time. Therefore, a payment method that handles fraud well today may not do so as effectively tomorrow. This means error resolution framework mechanisms, refund mechanism and liability rules need to be constantly monitored and changed to ensure they remain relevant for a rapidly changing world. 6 6. Brand Risk If a payment method has received negative press for its poor security or is perceived as a money laundering front for example, then acceptance of the payment method could create brand concerns for merchants that tender those payments. Additionally, the issuers and processors of payment methods should be financially stable with good credit ratings, and not be loss making institutions propped up by investors. This kind of volatility can result in payment methods exiting markets or becoming bankrupt at short notice, which can cause merchants issues including customer dissatisfaction and irretrievable lost revenue. Therefore, a perfect payment method will be financially stable, secure from data breaches, provide flexible termination and should not have any negative brand associations. irrevocable (as envisioned in the U.S. RTP® framework). 5 5. The Changing Face of Fraud – i.e., Future Proofing
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