In 1880, we introduced the first ever credit voucher, which led the way as a pre-curser to credit cards and the likes, followed by the reveal of metal deferred payment cards from Western Union in 1914 and subsequently several appearances of payment or credit cards that allowed to users to credit shop at specific stores, like Diner’s Club, the first independent credit card company in the world.
Since American Express made credit cards popular in 1958, the idea of buying with cash that isn’t yet available to the buyer has evolved into the concept of cashless buying with money we do have. The accessibility, ease and efficiency of credit cards led to a culture, globally, that accepts plastic cards as the norm. The industry 4.0 revolution now presents the next stage in said evolution, whereby we are experiencing the proliferation of contactless payments, both via plastic debit cards and more recently, via smartphones.
2017 marked ten years since contactless was introduced, so it may still be another 10 years until we see an almost complete eradication of cash from western society. Currently, contactless payments account for just over a third of all payments in the UK. Equally over a third agree that the UK will be cashless in another 10 years. The further spread of contactless via mobile, which would only go to shorten those 10 years, is however hindered by the need to link a bank account with the customer’s smartphone, making this option inaccessible to a greater part of the world’s consumers.
A recent study conducted by Forex Bonuses reveals that Canada is currently number one in the list of top cashless countries worldwide , with 57% of transactions nationally being made without cash, as opposed to 2% in Sweden and France, 52% in the UK, and 10% in China. In China however, 77% of people said they were aware of cashless options, which could mean potential for a huge boost of cashless transactions in years to come. All in all though, 83% of global transactions are in cash, according to Western Union.
The ease of cashless transactions proves the potential for revolutionary popularity, as with a flick of a finger or a swipe of the thumb, all liquid assets can be accessed and moved around. The secondary benefits are the effect a cashless society can have on crime, both in terms of banks & financial institutions, as well as street crime and potential for muggings. In addition, though most cash payments do result in a printed receipt, digital records of transactions are few and far between, and whether by blockchain or other, documenting digital footprints for transactions has the capacity to help governments better set policy, tax citizens and stop fraud, as well as help banks to better monitor financial spheres and adjust rates and inflation accordingly. The introduction of Open Banking will also only go to facilitate these benefits in the digital payments sphere.
So, why are we not already making the world completely cashless and sending all our money to be burnt? One question we should ask first is whether this is truly something people want. Bloomberg reports that a recent move by Indian authorities to remove 86% of cash in circulation proved to be difficult, and shocked many cash dependent markets. The poor especially depend highly on using cash, and making everything digital could put lower earners at a serious disadvantage and the prospect of governments and banks having so much control of people’s finances does pose further concerns. Another major issue is that while street crime and fraud could be better monitored and prevented, cybercrime could rise in equal or greater measure, depending on the vulnerability of transaction systems.
Further on the topic of cybercrime, back in the day ‘looking over your shoulder’ referred to watching your back for pickpockets; that then became about being aware of criminals stealing your PIN, but the new risks are money swiping and the potential for losing your contactless card, which can then be used by whoever finds it or picks it up. Equifax recommends lining your wallet to eliminate the risk of signal and antenna making contact in a money swipe grab, which in essence, is today’s version of pickpocketing.
Bitcoin and the blockchain are proving useful in the payments security sphere, but in their short-lived popularity have already displayed weaknesses and risks that will need time to fix. Equally, infrastructure will have to keep up, as Visa have already showed that IT outages can cause serious disruptions, leaving users unable to make or take payments. On top of this, connections are required to record and document the data, as well as transfer information between the buyer, seller and bank; if the connection is affected in any way, this can create major difficulties. With cash, these issues don’t really exist.
Though no longer king, cash is still the biggest way of actioning transactions around the world, and the physical act of exchanging money still feels the most secure and manageable for most. It’s still also the go-to fall back when the ole’ chip and pin doesn’t work, so it’s still very much in play, in fact the growth of cash circulation outpaced economic growth over the last 10 years. Despite the fact there has never been more cash in circulation worldwide, we are slowly moving towards a cashless society, but the eventuality of a 100% cash free world is still highly debatable.
What do you think? Would you be prepared to burn all your cash in return for liquid assets and the promise of a risk-free digital payments sphere?
Sources: https://www.thetimes.co.uk/article/ten-years-of-contactless-payments-ck00rsx9p http://www.theukcardsassociation.org.uk/history_of_cards/index.asp https://www.finance-monthly.com/2018/07/over-a-third-think-the-uk-will-be-cashless-in-10-years-or-less/ https://www.finance-monthly.com/2017/02/a-cashless-society-the-urban-myth-of-2017/ https://www.finance-monthly.com/2018/08/high-level-of-cyber-security-and-cashless-go-hand-in-hand/ https://www.thetimes.co.uk/article/why-contactless-is-quick-and-easy-for-fraudsters-8dg6dfbfq https://www.equifax.co.uk/resources/identity_protection/how_to_avoid_contactless_card_fraud.html https://www.finance-monthly.com/2017/02/a-cashless-society-the-urban-myth-of-2017/ https://money.cnn.com/2017/11/20/news/economy/cash-circulation-payment/index.html
Austin Newkirk began his insurance career at a local agency in his hometown of Toccoa, GA and later on transitioned to Country Financial for an expansion of opportunities. Currently a sales leader for the firm’s local office in Toccoa, his role involves finding new ways to market Country Financial’s products and recruiting new businesses and individuals. Below Austin tells us about his passion for insurance and how this passion changed his life!
What are the typical insurance matters that you assist clients with?
Each day I assist our customers with typical insurance matters such as servicing current policies and making sure that they are taken care of properly. I process payments daily, work on claims and make any policy changes that a client may request - these are just a few of the many things I do for my customers.
What drew you to this field?
Insurance was not my first choice as a career. I am an extrovert and I love to socialise. As I grew older and began college, I started thinking about different career paths that interested me. At that time I had no idea what I wanted to do. While in college, I served as a parts sales manager at AutoZone. I loved the job and the socialising, but there was no opportunity for advancement within that company. I started reading online and the idea about a career in insurance hit me like lightening! I love the customer service side of this job and being able to help people with something that truly makes a difference in their lives is a phenomenal feeling.
What are some of the complexities of working within insurance?
Insurance is very complex and helping people understand it can be just as challenging. When working within insurance, there are so many different aspects to focus upon, but at the same time, so many resources to help you learn. Insurance is constantly changing and there is always something new to learn.
What are the challenges that you’ve been facing recently in relation to changes in what customers expect in terms of insurance products and services?
In the insurance industry, one challenge you will always face in relation to changes in what customers expect are rates – they are constantly fluctuating. It is a battle that all agencies fight. It is especially difficult when a long-term customer with a clean record comes in and we have to tell them that the state has raised the rates. At this point, we, as professionals, have to show these customers value in what we do to keep their business.
Technology and systems are always changing and this can cause customers to be uneasy toward any change - especially when trying to show customers new products and services. Sometimes change must happen due to ever-changing factors in the insurance business and customers’ lives. With these changes, we must prepare to assist our customers with any new updates that are happening frequently. Programs are added and removed, making everything change which, in turn, can upset our customers and sometimes, the agent too. Due to mandated insurance laws, every company and its agents should always be prepared to adapt to new changes in the insurance industry.
What do you hope to accomplish in the future?
Working in insurance has changed my life. My goal is to open my own office in just a few short years and run a successful insurance business of my own. I’m going to continue to love the career path I have chosen and continue to help service my clients to the best of my abilities.
I encourage any person who’s not sure what career path to take to look into the insurance industry. It is a sector that will always be around and there is always opportunity for advancement. The satisfaction of helping a person identify their needs and providing them with a solutions is very satisfying and it makes me feel like I have helped someone in need.
If the recent software failures in the financial industry are anything to go by, then disruption to payment systems are becoming the ‘new normal’. This week David O Riordan, Principal Technical Engineer, SQS Group, delves into the benefits of blockchain, in particular in the aftermath of a software disaster.
The VISA card payment outages, Faster Payments issues and disruption to card payments at BP petrol garages, all within the first half of 2018, have caused many to question the regulatory environment around financial institutions. And with the Bank of England and FCA requesting banks to report on how prepared they are for IT meltdowns, stating that any outages should be limited to just 48 hours, the finance industry is under real scrutiny when it comes to technology.
Corporations are now expected to have a Disaster Recovery (DR) and business continuity plan put into place to avoid falling victim to software failures. Nevertheless, what business leaders need to understand is that while no IT solution is completely foolproof, and will likely go down from time to time, the key is knowing how a potential internal failure can be mitigated without affecting the overall performance. This can only be achieved with a well-practiced DR plan that is second nature to the responsible parties and can be executed in the desired timeline. However, this can be both costly and time-consuming to set up. How can such incidents be minimised, or potentially eliminated, in the future? Blockchain is an alternative technology solution business leaders should consider, as it has fraud protection already built-in and is highly resistant to all type of attacks and failures.
Blockchain for Business Continuity
Built-in Fraud Protection:
Blockchain is a de-centralised platform, where every node in the network works in concert to administer the network and no single node can be compromised to bring down the entire system. It is a form of distributed ledger where each participant maintains, calculates and updates new entries into the database. All nodes work together to ensure they are all coming to the same conclusions, providing in-built security for the network.
Most centralised databases keep information that is up-to-date at a particular moment. Whereas blockchain databases can keep information that is relevant now, but also all the historical information that has come before. But it is the expense required to compromise or change these databases that have led people to call a blockchain database undisputable. It is also where one can start to see the evolution of the database into a system of record. In the case of VISA and other payment systems, this can be used as an audit trail to track the state of transactions at all stages.
Ingrained Resiliency:
Additionally, blockchain removes the need for a centralised infrastructure as the distributed ledger automatically synchronises and runs across all nodes in the network by design. As a result, Disaster Recovery (DR) is essentially built in, eliminating the need for a synchronised DR plan. The inability to alter entries in the ledger also contributes to the overall security of the blockchain, improving resilience against malicious attacks.
This is unlike traditional large centralised systems where resilience is provided by failover within a cluster, as well as site-to-site Disaster Recovery at a higher level. Disaster Recovery plans and procedures can be costly due to a large amount of hardware and data replication required. Furthermore, most businesses often do not execute it, so when disaster strikes, corporations are not prepared to deal with the aftermath; as seen with VISAs outage problems.
The Downside of Decentralised Blockchain Technology
Performance:
While blockchain can be used as a system of record, and are ideal as transaction platforms, they are slow compared to traditional database systems. The distributed networks employed in blockchain technology means they do not share and compound processing power like traditional centralised systems. Alternatively, they each independently service the network; then compare the results of their work with the rest of the network until there is an agreement that an event has happened.
Confidentiality:
In its default, blockchain is an open database. Anyone can write a new block into the chain and anyone can read it. Private blockchains, hybrid limited-access blockchains, or ‘consortium’ blockchains, can all be created, so that only those with the appropriate access can write or read them. If confidentiality is the only goal then blockchain databases offer no benefit over traditional centralised databases. Securing information on a blockchain network requires a lot of cryptography and a related computational liability for all the nodes in the network. A traditional database avoids such overhead and can be implemented ‘offline’ to make it even more secure.
Blockchain for Disaster-Relief?
As an emerging digital disruptor technology, no one can say for sure where blockchain technology will ultimately lead. While many have disregarded this technology, the potential is certainly there to attempt to solve some of the most common problems in the digital space.
However, with high customer demands on the increase within financial services and with the combination of a widespread network and substantial cost pressures, IT outages will continue to impact consumer experience. Businesses can minimise potential damage by managing communication effectively and dealing with the technical nature of the outage quickly. With a comprehensive and well-rehearsed data recovery plan, it can not only mitigate outages but maintain standards of service too. This will encourage customer retention, loyalty and growth. Therefore, blockchain should be considered, as it has a built-in check and balance to ensure a set of colluding computers can’t ‘game’ the system; as the network is virtually impossible to crack. As blockchain processing efficiency improves, it will increasingly become a more viable proposition, potentially making traditional disaster recovery unnecessary in the future.
With the future looking more cashless by the day, the future of cybersecurity looks even more risk heavy. Below Nick Hammond, Lead Advisor for Financial Services at World Wide Technology, discusses with Finance Monthly how banks/financial services firms can ensure a high level of cyber security as we move towards a cashless society.
Debit card payments have overtaken cash use for the first time in the UK. A total of 13.2 billion debit card payments were made in the last year and an estimated 3.4 million people hardly use cash at all, according to banking trade body UK Finance.[1] But with more people in the UK shunning cash in favour of new payments technology, including wearable devices and payment apps as well as debit and credit cards, the effects of IT outages could be more crippling than ever.
Take Visa’s recent crash, for example, which left people unable to buy things or complete transactions. Ultimately, payment providers were unable to receive or send money, causing serious disruption for users. And all because of one hardware issue. Finding new ways to mitigate the risk of system outages is a growing area of focus for financial services firms.
Application Assurance
At a typical bank, there will be around 3,500 software applications which help the bank to deliver all of its services. Of these, about 50-60 are absolutely mission critical. If any of these critical applications goes down, it could result in serious financial, commercial and often regulatory impact.
If the payments processing system goes down, for instance, even for as little as two hours in a whole year, there will be serious impact on the organisation and its customers. The more payments systems change to adapt to new payments technology, the more firms focus their efforts on ensuring that their applications are healthy and functioning properly. As Visa’s recent hardware problems show, much of this work to assure critical applications must lead firms back to the infrastructure that their software runs on.
Having a high level of assurance requires financial services firms to ensure that applications, such as credit card payment systems, are in good health and platformed on modern, standardised infrastructure. Things become tricky when shiny new applications are still tied into creaking legacy systems. For example, if a firm has an application which is running on Windows 2000, or is taking data from an old database elsewhere within the system, it can be difficult for banks to map how they interweave. Consequently, it then becomes difficult to confidently and accurately map all of the system interdependencies which must be understood before attempting to move or upgrade applications.
Protecting the Crown Jewels
Changes to the way financial services firms use technology means that information cannot simply be kept on a closed system and protected from external threats by a firewall. Following the enforcement of Open Banking in January 2018, financial services firms are now required to facilitate third party access to their customers’ accounts via an open Application Programming Interface (API). The software intermediary provides a standardised platform and acts as a gateway to the data, making it essential that banks, financial institutions, and fintechs have the appropriate technology in place.
In addition, data gets stored on employee and customer devices due to the rise of online banking and bring-your- own- device schemes. The proliferation of online and mobile banking, cloud computing, third-party data storage and apps is a double edged sword: while enabling innovative advances, they have also blurred the perimeter around which firms used to be able to build a firewall. is no longer possible to draw a perimeter around the whole system, so firms are now taking the approach of protecting each application individually, ensuring that they are only allowed to share data with other applications that need it.
Financial services firms are increasingly moving away from a product-centric approach to cyber-security. In order to protect their crown jewels, they are focusing on compartmentalising and individually securing their critical applications, such as credit card payment systems, in order to prevent a domino effect if one area comes under attack. But due to archaic legacy infrastructure, it can be difficult for financial institutions to gauge how applications are built into the network and communicating with each other in real-time.
To make matters more difficult, documentation about how pieces of the architecture have been built over the years often no longer exists within the organisation. What began as relatively simple structures twenty years ago have been patched and re-patched in various ways and stitched together. The teams who setup the original systems have often moved on from the firm, and their knowledge of the original body has gone with them.
The Next Steps
So how can this problem be overcome? Understanding how applications are built into the system and how they speak to one another is a crucial first step when it comes to writing security policies for individual applications. Companies are trying to gain a clear insight into infrastructure, and to create a real-time picture of the entire network.
As our society moves further away from cash payments and more towards payments technology , banks need the confidence to know that their payments systems are running, available and secure at all times. In order to ensure this, companies can install applications on a production network before installation on the real system. This involves creating a test environment that emulates the “real” network as closely as possible. Financial players can create a software testing environment that is cost-effective and scalable by using virtualisation software to install multiple instances of the same or different operating systems on the same physical machine.
As their network grows, additional physical machines can be added to grow the test environment. This will continue to simulate the production network and allow for the avoidance of costly mistakes in deploying new operating systems and applications, or making big configuration changes to the software or network infrastructure.
Due to the growth in payments data, application owners and compliance officers need to be open to talking about infrastructure, and get a clear sense of whether their critical applications are healthy, so that they can assure them and wrap security policies around them. An in-depth understanding of the existing systems will enable financial services firms to then upgrade current processes, complete documentation and implement standards to mitigate risk.
[1] http://uk.businessinsider.com/card-payments-overtake-cash-in-uk-first-time-2018-6
Jeffrey Wernick is an independent investor whose portfolio includes early holdings in Uber and Airbnb. Wernick started buying bitcoin in 2009, the year it was created. Wernick says that people misunderstand bitcoin because it is often explained as a payment mechanism instead of as a store of value.
Taking a closer look at the start-up industry in Europe, card processing specialists, Paymentsense, have conducted research to find out which countries have seen the most significant rise in start-ups between 2013 -2017.
The data has been mapped out across Europe allowing users to uncover the industries that each country specialises in and how fast those industries are growing.
Paymentsense analysed 30 European countries and ranked each one of them based on how many new businesses have been registered in that 5-year period and which business types have been the most popular in these countries.
Turkey tops the list with the most start-ups registered, followed by France and then the United Kingdom. However, data reveals that the UK is the fastest growing start-up nation in Europe and has brought more than a few successful companies to Europe, including Transferwise and Deliveroo.
Top 10 countries fuelling the European start-up industry:
Among all these countries, the UK has seen the biggest growth in the number of start-ups between 2013 and 2017 at 5.09%, followed by Romania and Portugal. What all of them have in common is a business-friendly environment that gives founders the possibility to grow and nurture their company over time.
When looking at what type of start-ups have dominated Europe in the last few years, wholesale and retail have the largest presence with 3.7 million new businesses started up.
This is surprising to see when in recent years we have seen a retail crash with companies like Woolworths and ToysRUs go bust.
The type of companies that have started up in Europe between 2013-2017
Guy Moreve, Chief Marketing Officer at Paymentsense, says: “It’s interesting to see that the UK ranks among the top five countries with the highest numbers of registered new businesses. It shows that the country offers a great setting for those interested in founding their own company.
Further afield, it’s fascinating to see how Europe has changed in recent times. A number of countries are now placing more emphasis on technology which has helped create a ‘golden era’ for tech startups.
“In order to thrive a business in your respective country, make sure you analyse the market you’re addressing – what works best and what doesn’t; It’s also worth looking at the legal and environmental conditions in order to make sure your business idea is a success”.
(Source: Paymentsense)
The 05: Do Not Honor card declined response is the most common and general ‘decline’ message for transactions that are blocked by the bank that issued the card. This week Finance Monthly hears from Chris Laumans, Adyen Product Owner, on the complexities of this mysterious and vague transaction response.
05: Do Not Honor may be the largest frustration for any merchant that regularly analyses their transactions. Although it frequently accounts for the majority of refusals, it is also the vaguest reason, leaving merchants and their customers at a loss about how to act in response.
Although unfortunately there isn’t an easy, single answer about what this refusal reason means, there are several suggestions as to what could be the cause behind the non-descript message. So what might the 05: Do Not Honor mean? From our experiences analysing authorisation rates and working with issuers and schemes, here are some plausible explanations.
Insufficient funds in disguise
In probably half of the cases, 05: Do Not Honor is likely just an Insufficient Fund refusal in disguise. Reality is that some issuers (or their processors) do a poor job of returning the appropriate refusal reasons back to the merchants. This is both due to the use of legacy systems at the issuer side as well there being no mandates or monitoring by the schemes on this, letting issuers continue to use it as a blanket term.
By looking at the data from various banks, it is easy to see how “Do Not Honor” and Insufficient Funds can often be used interchangeably. Records that show a disproportionately high level of Do Not Honor and a low level of Insufficient Fund refusals would suggest one masquerading as the other. Given that Insufficient Funds is one of the most common refusal reasons, 2nd maybe only to “Do Not Honor”, it makes sense that “Do Not Honor” by some banks may actually represent Insufficient Funds.
Refusal due to credential mismatches
Although the words “Do Not Honor” aren’t the most revealing, sometimes other data points in the payment response can be clues for the refusal. Obvious things to look at are the CVC response, card expiry date, and, to a lesser extent, the AVS response. For lack of a better reason, issuers will frequently default to using “05: Do Not Honor” as the catch-all bucket for other denials.
Suspicion of fraud
The most appropriate use of “05: Do Not Honor” would be for declining transactions due to suspicious activity on the card. In some cases, although the card is in good standing and has not been reported lost or stolen, an issuer might choose to err on the side of caution due to a combination of characteristics on a given transaction. For example, a high value transaction made at 3am from a foreign based merchant without any extra authentication, likely will trigger a few too many risk checks on the issuer side. These types of refusals will again unfortunately be designated into the “05: Do Not Honor” category, with merchants drawing the short straw. Even though issuers may be able to point to specific reasons why the transaction was refused, issuers have no way to communicate this back to the merchant.
Some astute merchants might point out that issuers should be able to use “59: Suspected fraud” in these cases. Some issuers however remap these 59 refusal reasons to 05 before sending the response to the acquirer to protect store owners in the POS environment and avoid uncomfortable situations with the shopper standing in front of them.
Collateral damage
Finally, the reality is that your likely not the only merchant that a given shopper interacts with. Regardless of how good your business is or how clean your traffic is, a shopper’s recent history with other merchants will influence the issuers decision on your transaction. For lack of a better reason, the catch-all 05: Do Not Honor refusal in some cases be seen as “Collateral damage”. If the shopper coincidentally just made a large purchase on a high-risk website or went on a shopping spree before reaching your store, there is the possibility that the issuer may decline the transaction at that moment in time. In these cases, there is unfortunately very little that can be done, except to ask for another card or to try again later.
Hopefully this helps shed some light on the possible reasons why ‘05: Do Not Honor’ is so dominant in the payment space and that there is no single reason for this response. Adyen’s advice to dealing with these refusals is to look at the data at individual issuer/BIN levels and from there, try to distil patterns particular to those bank’s shoppers.
Below Graeme Dillane, manager, financial services, InterSystems, offers insight into best practices in the financial services industry, highlighting where current weaknesses lie and how they can overcome.
Increasing trade volumes and periods of high market volatility create technology challenges for financial services firms. This is especially true for sell-side firms, which can experience extremely high transaction volumes, since they partition already high volumes of incoming orders into an even greater number of smaller orders for execution. At the same time, they must support a high number of concurrent analytic queries to provide order status, risk management, surveillance and other information for clients.
This requirement for multi-workload processing at high scale, coupled with the highest levels of performance and reliability, has historically been difficult to satisfy. Compounding the challenge, transaction volumes grow not only incrementally and within expectations, but can also spike due to unexpected world events.
A critical component of a sell-side firm’s technology infrastructure is its transaction management and analytics platform. The platform must be reliable and highly available. A failure, or even a slowdown of the platform, can have severe consequences as it can take many hours to rebuild order state and resume normal operations after a failure. In the meantime, the firm’s ability to process additional trades and provide order status is compromised and financial losses mount.
To successfully handle growth and volatility without performance or availability issues, the platform must balance transactional workloads with the concurrent analytic demands of downstream applications at scale. Financial services organisations, particularly sell-side firms, must process millions of messages per second, while simultaneously supporting thousands of analytic queries from hundreds of systems that must report on the state of orders while performing other queries.
Currently, in-memory databases are widely used, primarily due to their ability to support high-performance data-insert operations and analytic workload processing. However, in-memory databases alone are not an ideal platform for transaction management and analytics for several reasons:
- Limited ability to concurrently process transactional and analytic workloads at scale. In-memory databases are not designed to support multi-workload processing at high scale. As a result, as volumes increase, at some point both the transaction processing and the analytic queries will slow or stall.
- Scale limitations - Since the data in an in-memory database is stored in main memory, the working data set is limited by the available amount of memory. This creates risk when transaction volumes spike, compromising the ability to process new orders once the available RAM is filled.
- High costs - Since servers have hard memory limits, scaling in-memory databases beyond these limits requires purchasing and procuring additional nodes – to sustain normal operations plus headroom for unexpected volatility - increasing overall costs.
- System downtime - Since the data is stored in-memory, if the database server fails, the data that is resident in-memory on that server is lost.
Finding a Solution
So, given these challenges, how can financial services organisations find a solution that enables them to simultaneously process transactional and analytic workloads at high scale?
The answer comes in the form of the Hybrid Transaction/Analytical Processing (HTAP) database.
Traditionally, online transaction processing (OLTP) and online analytical processing (OLAP) workloads have been handled independently, by separate databases. However, operating separate databases creates complexity and latency because data must be moved from the OLTP environment to the OLAP environment for analysis. This has led to the development of a new kind of database which can process both OLTP and OLAP workloads in a single environment without having to copy the transactional data for analysis. HTAP databases are being used in multiple industries for their ability to uncover new insights, create new revenue opportunities and improve situational awareness and overall business agility for organisations.
The best HTAP database platforms deliver the performance of an in-memory database with the persistence and reliability of a traditional operational database. They are optimised to accommodate high transactional workloads and a high volume of analytic queries on the transactional data concurrently, without incident or performance degradation, even during periods of market volatility.
They have a comprehensive, multi-model database management system (DBMS) that delivers fast transactional and analytic performance without sacrificing scalability, reliability or security. They can handle relational, object-oriented, document, key-value, hierarchical, and multi-dimensional data objects in a common, persistent storage tier.
Moreover, the best of these embody features that make them attractive for mission-critical, high-performance transaction management and analytics applications. These include:
High-performance for transactional workloads with built-in persistence – The ideal scenario is to find a data platform that includes a high-performance database that provides transactional performance equal to, or greater than, in-memory databases along with built-in persistence at scale.
Data is not lost when a machine is turned off, eliminating the need for database recovery or re-building efforts. By using an efficient, multi-dimensional data model with sparse storage techniques, data access and updates are accomplished faster, using fewer resources and less disk capacity.
High-performance for analytic workloads – Seek out solutions that provide a range of analytic capabilities, including full SQL support, enabling you to use their existing SQL-based applications with few or no changes. Since the database stores data in efficient multidimensional structures, SQL applications achieve better performance than traditional relational databases.
Consistent high-performance for concurrent transactional and analytic workloads at scale - Ideally, solutions should provide the highest levels of performance for both transactional and analytic workloads concurrently, at high scale, without compromising performance for either type of workload. Since rising order volumes increase both the transactional and analytic workloads on the system, a data platform must scale to handle such workloads without experiencing performance or availability issues.
Positive Prospects
This article has highlighted that many financial services organisations are, for a variety of reasons, currently crying out for ways in which they can simultaneously process transactional and analytic workloads at high scale. Fortunately, help is now at hand. Thanks to the latest breed of data platforms for high-performance transaction management and analytics applications, both transaction processing and analytic queries are supported concurrently, at very high scale, with built-in durability and with the highest levels of reliability – and at a low total cost of ownership.
Below Dave Orme, SVP, IDEX Biometrics, discusses the challenging landscape of payments and fraud, the fight against scammers and the obstacles the future will find in a cashless society.
Clearing up the mess left behind by fraudsters is a serious challenge and sees financial institutions having to absorb the monetary and logistical damage of card payment fraud daily. Meanwhile, consumers are left with a feeling of dread when they see transactions, that they know they haven’t made, on their payment card accounts. Finding themselves needing to take time away from work or home, to report stolen cards, cancel cards and wait for new ones. Not only is this frustrating for cardholders, it takes a huge amount of time investment by banks to resource this process. Payment card fraud is a serious problem that affects every one of us.
In fact, card fraud is a serious and increasingly urgent problem. Financial Fraud Action UK (FFA UK) reports that in 2016, fraud across payment cards, remote banking and cheques totalled an astonishing £1.38 billion, an increase of 2% on the previous year. The overwhelming majority (80%) of this fraud involved payment cards; there was a particularly large (30%) increase in the proportion of cards lost and stolen, and these alone accounted for losses of £96.3 million.
There is no single reason for these figures; impersonation and deception scams, as well as data breaches, have all played their part. But the UK is becoming an increasingly cashless state — debit card payments overtook cash payments for the first time recently — so we have no real option but to stop the fraudsters. The obvious question is, how?
Fighting back
Financial institutions currently bear much of the impact of card fraud, and in response are investing heavily in machine learning, predictive analytics and other cutting-edge technologies to beat the criminals. These are having some effect; in 2017, fraud losses on payment cards fell somewhat (which contrasts with 2016, as we have seen), but even so there was still £566 million lost to payment card fraud alone and seven pence in every £100 spent was fraudulent — a very worrying statistic in a society that is rapidly increasing its reliance on cards.
In other words, payment card fraud has been a huge problem for a sustained period of time and the steps currently being taken to stop it are not effective enough.
Human nature
In a society that relies more and more on technology, payment cards are the weak link; or rather, the behaviours of the people who own and use payment cards are the weak link. It is human nature to make the mundane administration of life easier — but we all know how dangerous writing down your PIN because you keep forgetting it (and worse, keeping the card and the PIN together) can be. Many people are also guilty of sharing their PIN and card with their friend/partner/relative to enable transactions without the need to be present. Others give out cards and PINs to trusted people because they are elderly or have mobility problems and getting the necessities of life is so much easier that way. All these behaviours are very common, but they are also making card crime very easy.
People fail to keep their PINs or other card details safe not because they are inherently foolish or lazy, but because PINs are simply unfit for purpose. To be effective they demand a far higher standard of discipline and security from human nature than human nature is ever likely to give. The result is a massive headache for individuals, financial institutions and businesses all over the world.
But if not PINs, then what?
Giving the finger to fraudsters
Biometrics, including fingerprint recognition, is a field increasingly recognised as holding the key to card fraud prevention as such fraud becomes a more and more urgent problem. And while financial services may be looking at large-scale use of biometrics now, in other security-conscious sectors this has already happened. For example, many smartphones (which are themselves fast becoming the twenty-first century replacement for the wallet) are protected via fingerprint authentication, usually via a sensor on the lock screen. Passports are also routinely issued with biometric authentication built in, as are government ID cards. Biometrics are used where security is non-negotiable.
Until recently, including biometric authentication in a payment card was very difficult. This is because it required a sensor to be incorporated in the card and for many years those sensors were too large and inflexible to make that viable. However, there have been breakthroughs in this technology recently and we are now able to deliver a very thin, flexible fingerprint sensor that is easy to add to a standard card, so the major barrier to using biometrics with payment cards has now been overcome.
Looking ahead
Biometrics companies are now working in partnership with banks and other financial institutions, smartphone manufacturers and payment processing firms, to make gold standard authentication affordable, practical and available for payment card users and issuers. This is very good news for those in financial and security businesses, because the roll-out of biometrics in those fields will relieve much of the pressure of fighting what is, frankly, now a losing battle. With the arrival of simple, secure and personal authentication for all, hopefully we will see the demise of that twenty-first century pickpocket that is the payment card fraudster.
Neil Williams, Senior Associate Solicitor at business crime experts Rahman Ravelli, considers the possible fate of cryptocurrencies.
It has been reported that more than 800 cryptocurrency projects have died a death in the past year and a half. It is a statistic that cannot be ignored for a number of reasons.
There is little doubt that the rise – and, from what we are seeing, the fall – of cryptocurrencies has been dramatic. It wasn’t a slow and steady rise in popularity. Cryptocurrency seemed to arrive in a bang. Suddenly, as if from nowhere, it was everywhere. And now, it appears, we are seeing a dramatic reversal of that trend.
To explain such a reversal requires a brief examination of the way cryptocurrency functions. In a nutshell, new digital tokens are created through an initial coin offering (ICO); which sees those behind the start-up issuing a new coin. Investors can then choose to buy that coin. By doing this, any investor is not purchasing equity in that company but the cryptocurrency that they do purchase can be used on the company's product. Such a process is, in effect, speculation. Those who invest in an ICO do so because the coins are usually cheap in their early days – and they hope that they will increase in value and provide a tidy profit if and when they cash in.
It is a process that has attracted plenty of enthusiastic followers. Researchers examining the market have stated that companies raised £3.8 billion through ICO’s last year, whereas the figure for this year is expected to be more than triple that. The sheer scale of investment in cryptocurrency demands that we pay attention to the problems it is currently suffering. Those problems may have implications for the financial wellbeing of many individuals and organisations who have staked a lot on the continued rise of cryptocurrency – only to discover that hundreds of such coins are already dead or worthless.
This is due largely to cryptocurrency’s unreliability factor. Many were set up with the simple intention of making fraudulent gains. Fake start-ups have been known to see the initial hard sell swiftly followed by those behind an ICO disappearing with investors’ money. Others were created but the company’s product never became a reality. And even those that have been regarded as the “major players’’ have struggled. Bitcoin, the biggest cryptocurrency, has seen its value fall by about 70% since 2017’s record high of $20,000. It is certainly still in existence and still has its enthusiastic following. But the fact that even Bitcoin has suffered a major battering to its reputation and its value shows that cryptocurrency has a credibility problem. Cryptocurrency has to be seen as a risk. And the more its credibility is eroded, the less chance cryptocurrencies – both the legitimate and fraudulent ones – may have of attracting and retaining investment.
Cryptocurrencies may, therefore, face a struggle to regain credibility – and see that reflected in rising values. Cryptocurrencies, as originally devised, are by their nature a friend of the fraudster. They have no tangible product, they allow anonymity and the lack of regulation historically has made them a virtual haven for those who want to conduct their dealings away from the authorities’ prying eyes. An awareness of this may be behind the sudden attack of cold feet among many who were so keen to invest not so long ago. But conversely, we may still be some way off the logical outcome.
What has to be recognised is that as cryptocurrencies attract the attention of mainstream investors, and even banking institutions, the lure and attraction of them is diminishing for those who wish to remain in the shadows: the very people who have given the currencies their damaging credibility problem. If such mainstream investment in cryptocurrencies continues, it is sure to be followed by closer official scrutiny and / or regulation – either of which will have the effect of further driving out those looking to make fraudulent gains. The consequence of this may not only be these types of currencies having less appeal to those who originally traded in them, it may also lead to a more stable market being created for honest investors.
We may, therefore, see another swing upwards in cryptocurrencies’ fortunes, as they become increasingly marketable and viewed as safer and more legitimate than at present. This is something that could only be hastened if and when regulation is introduced. It would be unwise, therefore, to announce the demise of cryptocurrencies.
PayPal is an American company operating a worldwide online payment system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders. PayPal is one of the world's largest Internet payment system companies.
Established in 1998, PayPal had its initial public offering in 2002, and became a wholly owned subsidiary of eBay later that year. In 2014, eBay announced plans to spin-off PayPal into an independent company. Today, PayPal has over 200 million users worldwide. Under the kind patronage of Samuel Patterson.
Online research from Equifax, the consumer and business insights expert, reveals over a third (37%) of Brits believe the UK will be a cashless society within the next 10 years. Over half (53%) of 16-34 years olds believe we’ll be reliant on digital and card payments by 2028, compared to just 22% of those aged 55 or above.
However, the research shows that while the use of cash is declining1, it still has its fans. In the survey, conducted with Gorkana, respondents said coins are their top payment choice for vending machines (60%), parking meters (57%), charity donations (53%), and buses (52%), and paying with notes is the preference for taxis (42%).
While 46% of people use cash less often that they did three years ago, more than half (54%) of respondents use cash either as or more often, and almost three in five (59%) think shops, cafes or market stalls that only accept cash are convenient.
The findings also highlight that although the use of digital payments via contactless cards and online transactions is growing rapidly1, some people are still wary about security. Over a quarter (27%) of respondents don’t feel confident payments via websites or contactless cards are secure, and 26% think it’s difficult to track money spent using digital methods.
Sarah Lewis, Head of ID and Fraud at Equifax, said: “We’re in the midst of an exciting smart payments revolution. We can pay for our lunch with our watches and passers-by are now able to donate to buskers via contactless. This growth of new payment technologies is drawing us closer to a cashless society, but long standing preferences for cash remain in certain situations, particularly among older consumers.
“The shift to digital payments in the new economy raises important questions about the role of different payment methods, and highlights the need to balance the convenience people want with security. As digital and online payments continue to grow, so too does the associated fraud. It’s vital that new technology is maximised to give people the reassurance they need as they change the way they spend.”
(Source: Equifax)
