Blog by Paul Alfing, Chair of Ecommerce Europe’s e-Payments Working Committee
During the PAY-SEC Payment Security Summit in London on April 21, I participated in the keynote debate “Exploring the alternative payments market: reinventing money in retail”. The main question here was whether alternative payments, defined as all payments besides credit cards, would pose a new threat for security and if regulation was needed.
The chair of the debate rightly stated that most commerce is now omnichannel and that the same applies to payment systems. At least for those who want to survive. However, then they should present a proper balance between convenience and security. Also, they should survive our judgment in terms of Reach, Conversion and Cost.
The optimal payment mix
After all, merchants determine their optimal payment mix on the basis of Reach (how many consumers are using it?), Conversion (is it easy to transform a potential buyer in to a buyer) and Cost (service should be offered at a fair price). And merchants do not differentiate between channels. At least not for the way we judge them. Therefore, we look at all opportunities the market is offering, such as one-click buy, wallets, online e-payment solutions and virtual currencies and on which devices it can be used.
This brings me to interoperability. Interoperability is crucial, and there is not yet any confirmation that new regulations, such as the revised Payment Service Directive (PSD2) and the EBA SecuryPay guidelines, will solve that problem.
Liability and trust
In addition to interoperability, liability is also a challenge. Many new payment solutions are foreseeing a shift in liability and that is closely linked with trust. With regard to online business, trust is crucial. And security is crucial to trust. When looking at Reach, Conversion and Cost, security requirements might conflict with Conversion.
This shows the delicate balance between convenience and security. A perfect example of this is how 3D Secure works. Yes, there are situations where it is a perfect security requirement solution, but unfortunately there are some exeptions. Therefore, it important that there continues to be room for risk-based management, also with merchants. However, many payment developments with new check out experiences clearly make us less dependent on existing solutions. So, when we are able to avoid confusing the market, perhaps there lies the answer to the question of the delicate balance between convenience and security.