News Column

Digitisation of payments

August 6, 2014

Tell us more about the digitisation of payments?

"Governments and banks around the world are waging a war on cash - they are trying to reduce its use and replace it with electronic transactions. In some geographies this is taking the form of faster payment initiatives, the elimination of the use of cheques or the rise of contactless and mobile payments. While there are many positive aspects to this - consumers don't need to carry as much cash, businesses can reduce costs associated with cash transport - there are also some negative aspects to it.

"Firstly, as more and more transactions shift from physical to electronic, the pressure placed on payment systems increases. According to the Nilson Report, in 2012 there were over 7.3 billion payment cards across the globe and they generated 177 billion transactions. While these numbers are not surprising, what is surprising is that it is also growing quite quickly; in fact it increased by 9.3 per cent over 2011. And when mobile payments truly get going - when people use their phone instead of their credit card to make everyday payments - the number of transactions will escalate further. Will legacy payment systems be able to cope with these growing volumes? We have already seen some serious failures in the United Kingdom and Australia.

"Secondly, as the number of digital transactions increases, the number of opportunities for fraudsters to steal the information also increases. In addition to the high profile 'ATM cash- out' operations, we are also hearing anecdotal stories about people hacking contactless cards by using equipment in backpacks on public transport."

What investments need to be made to counter these problems?

"Modern payment solutions, such as our SmartVista solution, can help. They have been designed to handle growing volumes with ease, to support new payment channels quickly and to enable business users to clamp down on the techniques that fraudsters are using. Until now the challenge has been in replacing the old systems with the new systems. Historically these projects have been time consuming, risky and costly. However, with the right solution and the right approach, not only is it possible to break the project down into easily manageable phases but additional value-added services can be rolled out early in the project. This is what we've been doing for our larger clients across the world."

What are the value-added services?

"At BPC, we've always believed that the only business model that leads to long- term sustainable competitive advantage is one based on innovation. Put simply, businesses must offer products and services that none of their competitors can offer. By the time the competitor catches up, you simply move onto the next innovation, forcing them to try to catch up again. It may be products like cashless ATM withdrawals, or rolling out MPOS support to your merchants, or running sophisticated loyalty programmes for your customers. While this is a challenging business model it is achievable if you are supported by the right IT partner - and BPC Banking Technologies is that partner."

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Source: Banker Middle East

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