2 PAYMENT METHOD PROFILES: DIGITAL WALLETS
Fraud/Authentication Process Digital wallets also generally have customer verification processes for customers to access the wallet and to make purchases or send money, and in some markets, this is required by law for online transactions (e.g. Strong Customer Authentication in the EU). Authentication methods may include a log-in and password, a fingerprint ID, a PIN, or a Face ID used to authenticate a customer to the app and/or mobile device, or both. On the back end, digital wallet providers use a combination of encryption and tokenization to ensure enrolled payment credentials are stored safely and are also protected during a transaction as information flows between transaction stakeholders, such as the merchant, gateway, acquirer, digital wallet provider, fraud prevention solution provider, network, and issuer. It’s important to understand – particularly for stored value funds (which, for example, are usually governed by disparate state money transmission laws in the U.S.) – how partner liability is distributed amongst parties and what fraud controls each digital wallet solution has for consumer-to-business environments. . Cross-Border/FX Capability Many digital wallets operate internationally, meaning they can be used for cross-border transactions. Merchant acceptance strategies for digital wallets are likely to be dictated by customer demand. For example, merchants in the United States may only chose to accept WeChat Pay or Alipay if they receive a high volume of Chinese tourist customers. Large global digital wallets such as PayPal and Alipay offer a large range of supported currencies and some wallets can even offer currency conversion services allowing customers to pay for transactions abroad in their home currency. 312 313 Refunds There can be challenges associated with visibility into data around account credentials for customer response management, such as returns and unrecognized purchases. The back- end tokenization of wallet credentials can prove disruptive in some instances, such as trying to return a product with the underlying physical card, which has the potential to create customer confusion and avoidable customer contacts.
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