Black Friday, Cyber Christmas, and a Contact-Free New Year

paper bags near wall

For most of us 2020 isn’t going to be a year to linger fondly in the memory. It’s been a monumental slog in the face of grim news and little cheer but from a payments perspective we’ve seen an unsurprising surge in interest in all things payment related.

People have moved from cash to electronic payments – contactless transaction numbers have soared. People moved from face to face purchases to online. And, there’s been a ton of stress on payment systems as people have demanded refunds for holidays and flights they couldn’t take due to various travel restrictions. It’s been a year like never before.

We can expect this to be exacerbated over what will likely be an extended Black Friday and Christmas holiday shopping period. Online payments are expected to grow even though economies are in recession. For us in Europe it’s the last hurrah before PSD2 requirements on strong customer authentication come into force on January 1st. Merchants and payment companies will be well staffed on News Year Eve as they wait and see how the systems will hold up, and what sort of abandonment figures they’ll see as puzzled customers are presented with confusing authentication screens. We can probably expect a flood of concerned calls about phishing which are actually Strong Customer Authentication requests.

2.5D Secure

[Dave Birch] The 3D Secure (3DS) schemes — Visa’s Verified by Visa and MasterCard’s SecureCode — have come in for a lot of criticism (from, eg, me) and it’s been getting worse recently. Card-not-present (CNP) fraud continues to climb

According to the latest statistics from banking association APACS late last month, more than 25 million UK-issued credit and debit cards are registered with either Verified by Visa or MasterCard SecureCode,

[From Merchants and punters cry foul over Verified by Visa • The Register]

I have to say that, personally, I’ve never bothered to register either of my credit cards, but plenty of people have. Here’s the issue, from my perspective as a rational consumer. I’m protected from fraud by my credit card issuer, so I have no incentive to use 3DS of any kind. Any 3DS means more hassle for me for no return. The people who do benefit from 3DS — merchants, since merchants are protected against fraud by offering me 3DS even if I don’t use it — don’t insist on it and, crucially in my opinion, don’t incentivise me to use it. If I got air miles for using 3DS, I’d use it.

3D Secure, give it your best shot

[Dave Birch] How pathetic is it that when I want to buy something on the Internet using my bank card I have do mess around typing in endless details, numbers, codes, passwords and the like. It’s all so 1994. In an a modern economy, that sort of thing is seen as being on a par with Babylonian clay tablets or filling out paper forms to make a SEPA Credit Transfer. But in advanced countries, there is another way:

According to Sony Japan, the company has just sold its five millionth USB RFID dongle for home computers… the USB gadgets can be used in multiple ways. The most common involves swiping an IC-chipped phone or credit card to pay for purchases made online. The advantage lies in encryption applied to the card number before it is transmitted – a valuable safety net in these days of endless data breaches.

Other uses for the technology – terminals are already built into all Japanese Sony Vaios, by the way – include encrypting files on the PC, authenticating users for access to secure parts of a network and even acting as a screensaver lock. The most prosaic FeliCa application is, however, considerably more useful than any of those. Instead of using a ticket machine in a train station, travellers with IC passes can add cash to or renew their validity from the comfort of their desk using the PaSoRi, something we can expect to see in the West soon.

[From Personal RFID terminals go big in Japan | News |]

So when you want to buy something online with your DoCoMo phone, you just touch the phone to your dongle. That’s it. Since I have a brand-spanking new Barclaycard with Visa PayWave on board, what’s the barrier to a dongle to go with it? I’ve got my calculator-thingy from Barclays, and that works really well for using my bank account, but it doesn’t help me with payments at all. There are millions of these things being issued in the U.K…

Nationwide Building Society has contracted with French vendor Xiring for the provision of over one million handheld authentication devices which it will begin rolling out to its online retail banking customers this spring.

[From Finextra: Nationwide to dish out Xiring smart card readers]

You’d think we’d at least be able to use them in 3D Secure, if nowhere else. I hate to be a big whinger, but isn’t this just another example of the silo mentality at work, where the guys in charge of home banking are nothing to do with the payment guys.

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