On the Fintech Frontline: Three Key Areas Driving Payments Forward
By Dave Yohe, BillingTree
Fintech is seriously booming. PwC research recently found 82 percent of financial services companies expect to increase fintech partnerships in the next five years. The same report also identified consumer banking and fund transfers/payments as the two areas most likely to see the biggest fintech disruption.
For any organization regularly processing card-not-present (CNP) payments, boarding the fintech bandwagon is a must. There are three key fintech developments—APIs, regtech and cybersecurity strategies—companies processing CNP payments should take notice of.
First: APIs—Digitally Open for Business
One of the defining features of the fintech revolution is the need for immediacy. With the cross-industry transition toward offering a wider range of payment options, more companies are realizing omnichannel payment technologies provide a competitive edge.
This is reflected in how providers integrate new payment options. They want a clean and quick integration within their existing systems, and open application programming interfaces (APIs) provide the answer. There are now payment solutions with open APIs that enable established organizations and startups to more easily adapt their business models to customer demands. APIs help organizations springboard their services by offering the innovative payment tools they need to establish new ways of doing business.
These payment solutions are feature rich, with APIs enabling businesses in every market, from health care providers and property management companies to credit unions and the traditional accounts receivable market to enable their customers to make payments online, quickly extend their own payment functionality and roll out new features with minimal effort.
Simplified integration means businesses can adopt technology that provides them with a greater variety and flexibility of payment solutions, such as payment portals and gateways, negotiators, interactive voice response systems and virtual terminals. Open APIs enable these different payment services to be integrated into an organization’s existing platform so customers get the same user-experience across multiple payment channels. These solutions can be quickly adopted within existing payment systems, as well as easily customized for mobile-enablement.
Second: Regtech Keeping Compliance in Check
With new payment technology comes new compliance requirements. Some describe regtech as “the new fintech,” but it’s more of a progression of the fintech industry—where regulation is trying to keep up with the immediacy created by new payment technologies. Deloitte defines regtech as technology that seeks to provide “nimble, configurable, easy to integrate, reliable, secure and cost-effective regulatory solutions.”
With financial institutions grappling with an alphabet soup of compliance requirements—PCI, SSAE-16, HIPAA, to name a few—technology can provide guidance through difficult regulatory waters. There are many high-profile cases involving serious litigation for non-compliance, and payment data are some of the most sensitive information a company can hold on file.
Payment partners should be able to support customers in two key ways:
- With compliance education tools, knowledge and advice
- By offering payment technology integrations with built-in compliance, i.e., technology designed to meet industry regulations by a certified partner
Third: New Approaches to Cyber Threats
Alongside new payment technology and regulatory concerns, organizations must also invest in or make sure their technology can manage the risk of cyber-attacks. The financial services sector naturally finds itself under close attention from hackers and fraudsters looking for financial gain—new technology means new digital avenues. Organizations are beginning to realize this. Cybersecurity spending increased 67 percent from 2013 to 2017, according to PwC.
In the same PwC research, the proliferation of open source technology meant that nearly half (48 percent) of financial services firms surveyed take advantage of open source software to develop IT services and enhance infrastructure scalability. It was even more eye-opening, however, to find that 45 percent of those who use open source technology said it has improved their cybersecurity posture.
When partnering with a payment technology provider, as with compliance certification, organizations need to know customer information is kept safe. Tokenization is one component of securing payment methods and customer account information when processing via a gateway. Simply put, tokenization is the hashed storage of payment or account information. It is stored within a secure database outside a merchant’s network for use in re-identifying recurring or return customer payments—without the need to represent the card or account information.
New technologies will only continue to grow in popularity with consumers, which will open up new revenue opportunities for organizations receiving payments on a one-off or recurring basis. By leveraging open APIs from compliance certified providers with a proven cybersecurity record, organizations can begin to reap the benefits of the fintech revolution by integrating new services and payment options in a streamlined, but secure, way.
Dave Yohe is the vice president of marketing at payment technology company BillingTree. With more than 26 years of experience in marketing and advertising, Dave is responsible for marketing, lead generation, analyst relations and new market penetration, among other corporate marketing functions. He can be reached at [email protected].
In Viewpoints, payments technology professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.