The most disruptive trends in payments, ecommerce, and regulations in 2022

David Parker, CEO, Polymath Consulting

Merchants have forever complained about the cost of card transactions, but I love the fact that they have driven up average basket size.  Online merchants are now being offered a chance to reduce their costs by 90%+ by adopting Account-to-Account PISP payments.  We are already seeing this from major retailers.

How long until they start complaining about increased bank fees, how long until we start getting headlines as consumers realize there is no protection from them like on cards with schemes?  It is impossible to get back the funds once they have been paid. 2021 will see A2A payments really starting to take off, the question is how long until regulators needs to jump in with further consumer protection.

The second big thing is BNPL, which neatly in most markets circumvents credit regulations.  However, this is ultimately a credit, a loan. How long until regulators, again, step in and start protecting consumers? After all, in most countries there is some form of affordability check on lending, so why not on BNPL as well?

FRAUD & SECURITY

Payment fraud is becoming more complex and expensive. How will fraud attacks evolve in 2022?  Could you also outline key trends that will define security and authentication in 2022?

MF, CMSPI

Transaction success will be key for merchants to drive conversion and profitability. Balancing fraud, conversion, and authorisation rates by using the right tools and strategies, at the optimal cost for every single transaction will be the focal point in an ecosystem of new suppliers, fraud types and consumer habits.

Thomas Pernot, Payment and Fraud Manager, Square Enix

Fraudsters are using more advanced methods to bypass rules-based and ML technologies. With dark marketplaces such as ‘Genesis’, fraudsters can now buy compromised accounts and emulate legitimate fingerprints via the use of bots and browser plugins. It makes fraud mitigation via behaviour and fingerprint analyses more difficult for merchants and fraud solution vendors. Anomalies and fraudulent events are more difficult to detect, especially with news accounts.

The good news is that more and more merchants are now working together and sharing their data via sophisticated and encrypted channels to better counter fraudsters’ more advanced attack methods.

Jeremy King, Regional Head for Europe, PCI SSC

Same old same old, criminals will not change how they attack until the attack methods they use stop working. Unfortunately, the new technology keeps giving the criminals new opportunities to use old attack methods and they still work.

Attacks can be broken down into 3 key areas

• malware insertion
• Man in the middle attack
• skimming.

What changes is how they carry out the attacks, and what information they are after. Hence why attacks against Instant / Push payments are becoming an increasing problem. With these attacks, the criminals are sent the money directly into their accounts. Ransomware works in the same manner by shutting down the organization until the ransom money is sent to the criminal.

And as PCI SSC has always said, if you don’t need it, don’t store it. 

Diana Carrasco, Managing Director, Head of Merchant Services, Lloyds Banking Group

2022 will see the true democratisation of cryptocurrencies. The simplification of the ecosystem through easy-to-use apps has opened the doors to non-expert users to venture into the crypto universe. 

On top of that, the raise of providers that are creating an FX proposition including both fiat and cryptocurrencies supported by a payment card has opened a new avenue to consumers. On top of buying, saving and selling crypto, the payments card allows a revolutionary new use: mainstream spending. 

Being able to use a Mastercard or Visa card to pay from, for example, an Ethereum account, with full transparency for the merchant that will charge, process and receive the payment in their domestic currency thanks to the background FX capability, unlocks the potential for everyday use, putting the accent on the ‘currency’ of ‘cryptocurrency’.

Mark Gerban, Digital Strategy Lead: Mercedes-Benz Operating System (MBOS), Mercedes-Benz AG

Further innovations in distributed ledger technology (DLT) are starting to emerge, as credible business use-cases such as NFTs (non-fungible tokens) and Smart Contract technology have proven to be of significant value for the market.

Blockchain’s role in payments has been present in the high-value transaction’s realm for quite some time, and we will continue to see further growth in this sector, along with the automation of other financial services in the future.

TP, Square Enix

Crypto is booming. More and more card schemes, issuers, merchants, vendors, and consumers are jumping into the ‘crypto – wagon’: it is now very easy to trade crypto without middlemen or professional services; more merchants or vendors sell products or services and offer crypto as an incentive or reward; more and more card schemes and issuers are considering using crypto in a near future.

Is it safe? Not in my opinion, due to the volatility of most cryptocurrencies, their potential complexity for newcomers, and regulations restrictions in some countries.

Is it worth it? Absolutely! it does have extraordinary potential in terms of benefits if you know what you are doing (trading crypto, marketing incentives, potentially cheaper to use as APM etc). In the long run, it will definitely transform the conventional payment ecosystem. 

REGULATION, PSD2 & SCA

Is there a particular region or country on a global scale that poses more challenges in terms of payments and regulations in 2022? 

AT, Partelya Consulting

Netcetera

You don’t have to look far for an interesting and challenging year in terms of regulation and SCA. Let us look at the European Union.

After delaying the enforcement of Strong Customer Authentication required by PSD2 and the sigh of relief going along with it at the end of 2019, a lot of market participants spent last year trying to adapt to this regulation. The necessary requirements seem mostly fulfilled, but a lot of actors feel that there is some work to be done to reach acceptable usability and conversion territories.

Because of this, 2022 will likely be shaped by optimising the existing systems. Solutions like Delegated Authentication, Risk-Based Authentication, Secure Payment Confirmation, and others will play a significant role in the attempts to reach pre-PSD2 levels regarding many key conversion indicators.

Furthermore, customers will be exposed to a broader range of products based on the opportunities from the Open Banking regulation. In combination with the current interest rate level, this might lead some consumers to realize that banking is important, but not necessarily a specific bank. And if there will not be further postponements, we might see the end of an era with the discontinuation of 3DS 1.0.