Pub. 5 2016 Issue 2

17 s U MM E R | 2016 FEATURE • CurrentC/Chase Pay • Walmart Pay • Target REDcard Most of these digital payment al- ternatives work by having the consumer download an app and scan a QR code on their phone to facilitate the payment. The barcode changes after a few transac- tions—their form of security. The draw- back is, taking a picture of a QR code on a screen doesn’t seem particularly secure or technologically advanced. Without a Doubt—the Card Space Wallets Are Your Bank’s Ally Ultimately, it’s the digital wallets from the card space that will continue to drive community banks forward and preserve their interchange income. By riding the existing card rails, they’re sus- taining a process that is far from broken. The biggest difference these mobile wallets have brought forth is an added layer of fraud security through tokeniza- tion. Indeed, fraud prevention is a major impetus driving change in the payments space. The industry has made great strides with EMV chip cards, which surround static card numbers with dynamic data to encrypt the transaction. And that’s a big boon to fraud prevention. But tokenization takes security yet another step: not only does dynamic data sur- round the credential, but also the actual core credential itself—the card num- ber—changes. Essentially, merchants re- ceive one-time credentials that can only be used for a single transaction—making it virtually impossible for cybercrimi- nals to predict what the next dynamic credentials will be. Risks of Ignoring Mobile Wallets Banks choosing to not engage with alternative payments like Apple Pay, et al. risk losing consumer mindshare. If your card can’t be added to a digital wallet, consumers are going to use someone else’s card. Think of it this way: more than 80 percent of Americans have a smartphone of some type. So will phones be a larger or smaller part of everyday life in five years? The answer is pretty clear. How to Get Started To ensure you’re serving as many customers as possible, your best path is enrolling in Apple Pay, Android Pay and Samsung Pay. It makes sense, since the card networks have waved their costs for processing and facilitating the payments. And when you’re ready to jump into the mobile wallet pool, you should first reach out to your debit card proces- sor. Your processor should act as your partner in completing your agreements with MasterCard and Visa and your ad- dendum with the digital wallet provid- ers, as well as ensuring your bank’s card art and logo are populated in the wallets and, finally, informing you of your “go live” date. Digital Truly is the Future of Payments As for securing customer buy-in, it comes down to making them aware that digital payments are available, and encouraging their use. Right now, about one-third of mobile devices are capable of making proximity payments, but from now on, all new models will feature this capability. Since people naturally upgrade their phones every couple of years, digital payments will rise exponentially. Will your bank adapt? As product manager for Payment Analytics, Matt Herren has ex- panded CSI’s ability to address fraud through early identification of merchant breaches and fraudulent testing tech- niques. His work helps to increase bank profitability through fraud mitigation and card portfolio analysis, allowing cus- tomers to realize industry-leading results and maximize program performance.