Skip directly to search

Skip directly to content

 

Understanding authentication and open banking as a soft POS reality approaches

 
 

Next Gen Insights | Nick Telford-Reed |
10 March 2020

Following Merchant Payments Ecosystem 2020 (MPE2020), I wanted to share some of my thoughts on Secure Customer Authentication (SCA), how close the world is to a Soft POS future, and what merchants can do to facilitate stronger relationships with their customers and make certain they’re prepared for the ever-evolving practice of open banking.

As you know, there was a lot of chat about Secure Customer Authentication. I heard a lot of questions about how it might work, and a lot of statements on what's not right, but what was missing was clear guidance on what everyone should be doing. The reality is that whether we like it or not, there won't be any more extensions to implementation deadlines.

If you're a merchant, the answer has got to be two things.

1. Put the Customer First

Know your customer – which is something that great retailers do very well in any case. Build flows through your website which both encourage and reward your customers to register and log in. The more you can offer customers to be operating in a "known" rather than "guest" situation, the more options you're going to have to deal with authentication during the actual payment process.

More importantly, make sure that you're working now, urgently, with your processor and/or acquirer to ensure that your 3DS authentication experience is going to be as polished as possible. Don't assume that you will be able to use exemptions and exceptions.

If you're an acquirer or processor/gateway, you have about six months to get everything not only in place, but also well-managed and well understood. Some providers are bringing their A-game to their 3DS flows, and in particular, big merchants are going to move towards providers with strong propositions around low risk customer portfolios and trusted beneficiaries.

And issuers? If you're thinking you're going to use declines to defend against poor authentication experiences, I think you've got a rude shock lying in wait. There are some aggressive, agile neobanks who are just waiting for traditional issuers to misread the situation and assume customers won't care about poor 3DS experiences. They will, and the neobanks are well-equipped to put a card into the hands of your customers within 48 hours. Once they move and realise that the neobank experience is good, you'll have a real war on your hands to win them back.

2. Experiment and Collaborate for Open Banking Success

Beyond 3DS and SCA, we heard a lot about open banking, but not many answers about how it’s going to break out into the mainstream. Here, I think the advice has to be experiment and collaborate. It's not obvious to me which providers are going to win in open banking, particularly at the physical Point of Sale, but I believe the next two years will see some strong propositions emerge, even in traditional card-dominated markets. Find a partner to help you build some prototype solutions or do research.

Lastly, 2020 feels like the year "Soft POS" (phone as a terminal, or downloadable POS) will come of age. PayCore announced that they've achieved the holy grail of both processing the contactless card payment via a mobile phone without any additional hardware (so no "dongle" to be connected by bluetooth or headphone jack) and capturing the PIN entry from the cardholder on the same phone. That opens the door to mainstream high-value card acceptance using just a phone. As an econsystem, though, we're still missing the certification regimes that allow merchants, issuers, processors and schemes to have confidence to really push adoption, and I hope that the next 12 months sees emerging standards for the combination of card read and PIN entry without specialist hardware.

Soft POS is important because it has applicability for lots of merchants' use cases: Embedded payment capability for retail staff who have tablets for managing stock queries. Delivery staff who could take payment on delivery. Back-up devices in retail outlets when the main terminal or landline goes down. Immediate capability for when a customer needs a new outlet somewhere or as part of a Disaster Recovery (DR) plan.

For acquirers, it means more card acceptance, and quick lead to live conversion, as well as value added services, a low-cost route into micromerchants and an economic solution for the NFP sector like clubs, schools, societies or community groups.

More places, more pay. Everyone wins.

Nick Telford-Reed

Consultant

Nick is a passionate and award-winning technology innovator who has a strong focus on ensuring great customer experience. For close to two decades, he has worked to develop compelling visions of the future, to build strategies to help businesses achieve their goals. When he isn’t consulting, Nick can be found spending hours reading PSD2 drafts, asking waiting staff about the model number of their mobile POS, mountaineering, planning his next travel adventure or running around after his four kids.

 

Related Articles

  • 28 January 2020

    Nick Telford-Reed Shares His Predictions On Three Topics Ahead Of MPE

  • 31 October 2019

    Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves

  • 15 October 2019

    Payments Trends – A Q&A with Nick Telford-Reed

  • 02 July 2019

    Is your payments provider 3DS2 ready?

  • 07 May 2019

    Failure to launch - Why contactless in the US is behind the rest of the world

 

From This Author

  • 28 January 2020

    Nick Telford-Reed Shares His Predictions On Three Topics Ahead Of MPE

  • 31 October 2019

    Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves

  • 15 October 2019

    Payments Trends – A Q&A with Nick Telford-Reed

Most Popular Articles

What's Next in Digital – Predictions from the CxO
 

Next Gen Insights | Helena Nimmo | 04 August 2020

What's Next in Digital – Predictions from the CxO

The Rise of Human to Human Customer Experiences
 

Next Gen Insights | Teodora Chetan | 29 July 2020

The Rise of Human to Human Customer Experiences

Gaining Insights with Predictive Analytics
 

Next Gen Insights | Antony Francis | 21 July 2020

Gaining Insights with Predictive Analytics

Advice for running in-person and virtual hackathon events
 

Innovation | Bradley Howard | 23 June 2020

Advice for running in-person and virtual hackathon events

Automation in the Age of Digital Necessity
 

Automation | Mike Spille | 16 June 2020

Automation in the Age of Digital Necessity

Creating a Resilient Advantage
 

Business | Gareth Miller | 02 June 2020

Creating a Resilient Advantage

The impact of M&A on technology and security
 

Software Engineering | Radu Marinescu | 26 May 2020

The impact of M&A on technology and security

The Value of Writing as Part of the Design Process
 

Innovation | Erin Reeg | 19 May 2020

The Value of Writing as Part of the Design Process

Understanding the gender gap in the tech industry
 

Next Gen Insights | Bradley Howard | 05 May 2020

Understanding the gender gap in the tech industry

 

Archive

  • 04 August 2020

    What's Next in Digital – Predictions from the CxO

  • 29 July 2020

    The Rise of Human to Human Customer Experiences

  • 21 July 2020

    Gaining Insights with Predictive Analytics

  • 23 June 2020

    Advice for running in-person and virtual hackathon events

  • 16 June 2020

    Automation in the Age of Digital Necessity

  • 02 June 2020

    Creating a Resilient Advantage

  • 26 May 2020

    The impact of M&A on technology and security

  • 19 May 2020

    The Value of Writing as Part of the Design Process

  • 05 May 2020

    Understanding the gender gap in the tech industry

  • 28 April 2020

    Moving into the era of digital necessity

  • 21 April 2020

    7 tips for successfully transitioning to a fully remote team

  • 10 April 2020

    The Four Pillars of Truly Digitised Organisations – Part 2

  • 03 April 2020

    The Four Pillars of Truly Digitised Organisations – Part 1

  • 25 March 2020

    The Cultural Adoption of Healthtech

  • 10 March 2020

    Understanding authentication and open banking as a soft POS reality approaches

  • 02 March 2020

    Data Privacy in Healthcare - A Q&A with Dan Pelos

  • 07 February 2020

    CELEBRATING TWENTY YEARS OF REIMAGINING THE RELATIONSHIP BETWEEN PEOPLE AND TECHNOLOGY

  • 28 January 2020

    Nick Telford-Reed Shares His Predictions On Three Topics Ahead Of MPE

  • 23 January 2020

    Platforms and Partnerships: Will MWC reveal the new ecosystems needed to exploit 5G?

  • 14 January 2020

    How to Create a Company Culture that Encourages and Withstands Failure

We are listening

How would you rate your experience with Endava so far?

We would appreciate talking to you about your feedback. Could you share with us your contact details?