• Wednesday, April 24, 2024
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Winning the war against digital fraud – three possibilities

Inside N14bn fraud crippling Nigeria’s payment ecosystem

To optimise the digital payment experience of Nigerians, discerning players in the Nigerian tech space have focused on continuously developing intuitive solutions that provide ease, convenience and more importantly, security.

For every payment transaction, payment solutions providers are specifically concerned about security, as all users across the value chain (acquirers, issuers, and end-users) must be assured of the security of the platforms and solutions in order to adopt them.

Although the issues of cyber security have been with us since the introduction of technology to financial transactions, the dangers heightened during the pandemic as more human activities became digitized – organisations increased their digital footprints, banking, shopping, payments transactions became more innovative, but sadly, so have the attendant risks.

In August 2021, the Central Bank of Nigeria (CBN) issued a new framework and laid out guidelines specifying minimum requirements for enhancing cybersecurity in the financial industry. The reason is not far-fetched, our digital platforms must be secure for businesses and their customers.

A 2020 report by Kaspersky Security Solutions states that Nigerians suffered 3.8 million cyber-attacks between January and August. There are instances of mobile apps being used to steal information from mobile phones, and the production of ‘Covid-19 apps’ to steal personal information including Personal Identification Numbers (PINs) and passwords. These incidents and other examples slow the rate of digital service adoption and scaling.

How then do we make our platforms and solutions secure for enhanced user experience?

As an innovative technology company, Interswitch has committed to creating and enabling a payment ecosystem that helps commerce evolve, businesses grow, and individuals thrive.

To this end, the organisation is continuously innovating to provide a safe, secure, and sound network system that guarantees the protection of customers’ data and transactions. To achieve these, we are investing in strategic partnerships, cutting-edge capabilities and opportunities to enhance user experience in the digital payment space.

Leveraging the power of partnerships to drive impact, Interswitch has developed solutions that will enhance user experience with easy, convenient, and secure payment solutions across channels such as Automated Teller Machines (ATMs), Point of Sale (PoS), web, apps and mobile, among others.

One of the ways the company will be working to deflate the activities of these fraudsters is by improving upon existing security features across platforms, solutions and applications. This includes strengthening the protocol on existing authentication tools. While authentication with PINs and passwords are secure, they have proven to be vulnerable.

Biometric across ATMs and PoS terminals

Trends portend that biometric authentication represents the next frontier of digital security, offering enhanced security over PINs and passwords.

The biometric authentication protocol relies on users’ distinct physical features such as fingerprints, voice and facial features to verify payments. Due to the uniqueness of each individual’s features, the application of biometric authentication introduces a higher level of security which cannot be easily copied, making it a highly suitable authentication tool across digital platforms, devices and software.

The deployment of biometrics across ATMs and PoS terminals can make payments faster, convenient, and more secure, invariably driving up adoption figures.

A study conducted by Juniper Research estimated that biometrics will authenticate over $3 trillion of payment transactions in 2025, from just $404 billion in 2020.

The report states that biometrics, including fingerprint, iris, voice and facial recognition, are becoming critical to the payments landscape. It adds that the use of software-based face biometrics to authenticate payment will grow from 671 million users for payments in 2020 to 1.4 billion by 2025.

The Nigerian digital payment landscape is huge and shouldn’t be left out of this next level.

In addition, biometric authentication eliminates the multiple issues associated with the use of PINs such as the potential to forget the digits that make up the PIN; theft of the payment card; and inability to identify the original cardholder.

It also eliminates multiple users of an account, reducing the likelihood of compromising personal information. Biometric authentication is brought on as an additional layer of security and studies have shown that biometrics are faster, more secure and more efficient in the payments industry today than PINs and passwords.

Although the solution exists in silos in the Nigeria market, the Interswitch effort, birthed in collaboration with SterlingPRO, which serves as the strategic partner, will be the first effort to integrate the biometrics solution across ATMs and PoS portals, cutting across multiple issuers, acquirers, and merchants.

Read also: Digital Encode signs academic deal with US University to train Nigerian students

Tokenization

Another solution that enhances digital payment experience is Tokenization. Tokenization is a new security technology that replaces sensitive account information such as the 16-digit account number, with a unique digital identifier called a token.

With tokenization, the most sensitive data and information of a cardholder are replaced by a random token that will constantly change whenever the user initiates a transaction. The token allows payments to be processed without exposing actual account details that could potentially be compromised.

The Interswitch tokenization solution can be deployed online, in-App and in-store, and the technology is rooted in the understanding that the interfaces between consumers and their service providers is increasingly digital, and the connected devices are at the heart of those digital interactions.

Besides enhanced security that the tokenization solution ensures, other benefits of the solution include interoperability, enhanced customer experience, international merchant collection and improved card processing.

The personalised solution

Today, more cardholders are digital natives who expect personalized, engaging, and seamless experiences and whose loyalty will be tested if those expectations are not met. To meet the expectations of these digital denizens, financial institutions and card issuers should personalise the experience of the cardholders from the point of request to usage and even a re-issue.

That incredible experience is what the Interswitch Card Fusion solution brings. For financial institutions, it provides the opportunity for instant card issuance while managing card portfolios more efficiently.

For cardholders, they enjoy the chance of personalising their cards and having access within a shorter time frame.

The danger of digital theft and fraud began with the introduction of technology to financial transactions, these dangers will remain as tech companies and other stakeholders within the ecosystem continue to develop intuitive solutions.

Incidentally, these fraudsters will continue to upskill their hacks like the proverbial birds that have learnt to fly without perching. However, the digital payment solutions providers, like the proverbial hunters, must ensure to shoot without missing as they remain ahead of the game.

Lawal, MD, Payment Processing & Switching, Interswitch Purepay, writes from Lagos