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This Halloween Avoid the Scariest Moments in Payments

October 30, 2023

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Treat yourself to cutting-edge payments technology

Stop worrying about the hair-raising moments of the digital payments industry. Here’s a round-up of the ways to navigate the threat landscape.

A little pumpkin told us you’ve been worried about the rising incidents affecting the credibility and reputation of the digital payments industry. Here’s a round-up of the scariest payment moments and tips to ward them off, so that Halloween is more about treats than being tricked.

The Horror of Processing Errors

Payment processing errors, such as incorrect credit processing, duplicate charging, and late prestatement result in chargeback overheads for payment providers. The glitches are generally minor technical errors but can cause massive reputational and financial damage. They can even lead to perceived non-compliance and sub-standard customer service.

An example of such an incident lead to a fine of $150 million and $80.4 million in compensation to customers for Bank Of America. A glitch led the bank to charge a $35 overdraft fee multiple times from its customers, amounting to fraud, according to the Consumer Financial Protection Bureau (CPFB).

Leveraging cutting-edge technologies for payment processing using modernized switches designed for the digital economy is key to preventing such incidents. The crucial element in digitizing payments is partnering with an experienced team with specialization in digital payments technology and its intricacies to deftly navigate the complex payment landscape. Further, integrating compliance into the payments software is crucial to building trust among customers.

Tricky Extortionist Bate

While digitization has improved financial inclusion, it has also increased the attackable surface, making airtight security a business imperative for the payment services industry. There are numerous examples where a data breach has exposed thousands of customer records, costing millions to the business.

Cyberthreat Patterns in the Finance and Banking Sector

 

Data source: University of the Potomac

Melbourne-based Latitude Financial suffered a massive data breach, which compromised 14 million records in March 2023. Cybercriminals had stolen 8 million driver’s licenses, 53,000 passport numbers, and numerous monthly statements. Even worse, some records, dating back to 2005, were also stolen. While the monetary damage was worth $50 million, the attack had more significant consequences in terms of affecting the reputation of the business and scarring the experiences of 7.9 million customers across Australia and New Zealand.

The World Economic Forum has listed the proliferation of cybercrime among the top 10 global threats over a 2- and 10-year period, starting 2023.

Source: Terrafiniti

A robust security system is critical for the payments industry to prevent ransomware attacks. In the ever-evolving digital payments space, adopting DevSecOps-based technology solutions that integrate security assurance and compliance within the development process is critical. Maintaining the highest standards of security requires modernizing data governance, and migration to cloud platforms to prevent any loopholes while creating a frictionless payments ecosystem. 

Enabling superior customer onboarding, multi-factor, and biometrics-based authentication, and ensuring compliance across customer onboarding and data-sharing processes, can significantly enhance the security architecture of a payments platform.

Payment Failures

Digital payments, especially recurring payments, can fail due to diverse reasons. These may include data transmission errors, missed compliance updates, server failures, or lack of balance in the payee’s account. These may sound like honest mistakes, but for the payments industry, they can have massive consequences. From customer dissatisfaction to administrative overheads,  and from lost revenues to lawsuits, failed payments could be a nightmare worthy of a good Halloween.

As of October 2023, several Japanese hoteliers are planning a class-action lawsuit against Booking.com for failing to transfer customer payments promptly across Europe and Asia. While Booking.com’s initial statement blames a technical glitch, the expanse of the issue is too wide and may cause losses of billions of dollars if it fails to negotiate with hoteliers and the lawsuit proceeds. What has baffled the partner hotels most is not the payment failure, but the lack of any means to contact the finance or credit control teams to access immediate solutions and prevent such issues from escalating.

Massive failures for up to six months of denied payments, as in the above case, are more of a negligence issue. It puts the payment gateway operator under scrutiny. At merchant/business or user levels, payment failures can be managed by strategic technology augmentation. Payment prompts and automation of recurring payments are one way to eliminate failures. A few ways to minimize failures are advance notifications, automated retry systems, and initiating the dunning process. These facilities must be integrated into the payment facilitator’s platform to empower users to turn the feature on or off, as per their convenience, while some can be mandatorily kept on. At the same time, having an action plan to manage failed payments is an essential activity in the digital remittance and online payments ecosystem.

What Scares Users?

Proliferating cyberattacks and the widespread impact of financial incidents in the interconnected global economy evoke concerns for users. This can be damaging for the industry as a whole, since it deters users from adopting modern payment mechanisms and getting on-board with the future of payments. Here’s a look at what scares users the most:

  • Identity theft through fraudulent emails, misuse of SSNs, and fraudulent apps is the top concern among Americans. A 2023 survey by PYMNTS and Nuvei revealed that 73% of customers were concerned about the risk of fraud in online payments.
  • Technology isn’t flawless, and this is the second most worrying factor preventing Americans from adopting digital-only payment mechanisms. Technology glitches have been blamed for many data breaches.
  • Misuse of IIP is the next on the list. Unclear data procuring, storing, and sharing policies create anxiety among users regarding the privacy of their sensitive data.

The Digital Payments Ghostbuster

With over 27+ years of experience in the payments domain, Opus Technologies is adept at eliminating all digital payment fears via cutting-edge technology solutions. This Holiday season don’t let spooky stories of cyberthreats mar your festive spirit. Discover the best fit solutions to strengthen your digital payment ecosystem. Talk to our experts to learn more.

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