Payment News

QR Code Rollout in Sri Lanka

The Central Bank of Sri Lanka introduced a national QR code standard for local currency payments in July 2019. Known as LankaQR, 24 payment apps from 21 financial institutions have now been certified for use with the system. The central bank has begun a nationwide rollout of the LankaQR payment system.

Using LankaQR, consumers can pay for things directly from their bank accounts by scanning a QR code using a mobile device through a payment app. There is no charge to consumers to use LankaQR.

An ABC of Protecting Against Debit Card Fraud

The reasons for the rise in debit card fraud are varied. They range from the growth in online payments, where fraud is more easily committed, to criminals innovating faster than the issuers, acquirers and consumers. Alongside stealing the card directly from the consumer or intercepting the consumer’s mail, criminals have added card skimmer devices attached to ATMs to create a counterfeit card. The card is then used at the point-of-sale (POS) or ATM.

For the other major debit card crime, card-not-present (CNP) fraud, card details are acquired by hacking centralised databases of merchants or financial services, skimming, and phishing attacks. Often this information is used with personal data such as name, date of birth and the billing address, allowing purchases which are then sold on or even to open new financial accounts to monetise the stolen card details.

Businesses: A recent report by FinTech Magazine gives details of some of the counter measures being used by businesses. More than one will be needed.

For example, encrypting customers’ card data at each stage of the payment process and ensuring the IT infrastructure can effectively identify and respond to cybersecurity threats. It recommends getting the business Payment Card Industry Data Security Standard (PCI DSS) certified and using a combination of active fraud monitoring and two factor authentication checks via 3-D Secure ¹ in order to combat debit card fraud more efficiently.

Consumers: The consumer, of course, needs to be vigilant to protect themselves against scams, set up spending alerts and monitor account balances regularly. Using strong passwords for online services and enabling two-factor authentication even for social media accounts are basic steps which should not be ignored. Equally choosing a service provider that offers one-click card freeze or block if you do suspect crime makes the consumer’s life easier.

Phishing is a popular way to steal financial or personal information from individuals which is then used for debit card fraud. FinTech’s article suggests a range of defences - double-checking website URLs, using good anti-virus software, refusing to open or download email attachments from recipients you don’t know, and only sharing data with sites you know and trust.

Given the regulatory laws in most countries put at least some responsibility on the consumer, and as victims are usually required to report crime within a specific timeframe, consumers need to play their part.

APP and Fraud Investigation in the UK

Which?, a consumer magazine, has investigated how Authorised Push Payment (APP) fraud is treated. 75% of APP cases referred to the UK’s Banking Ombudsman found that banks had initially rejected applications for reimbursement incorrectly. The performance across the banking sector is similar with NatWest and the Royal Bank of Scotland, part of the same banking group, getting it wrong in 86% of cases and Santander in 82%, Bank of Scotland 81%. Fraud complaints were also found in favour of the victim for 78% of Lloyds Bank cases, 77% of Revolut and 74% of Nationwide.

Addressing Card Payment Transparency and Switching Issues

The UK’s Payments Systems Regulator (PSR) has published its final report into the card-acquiring market. It found that businesses with annual card payment sales between £15,000 and £50 million were not benefiting from the 2015 interchange fee cap. It found that the cost to businesses of processing card payments in the UK is greater than it should be.

It identified three features which restricted merchants’ willingness and ability to switch providers and to find the best deal.

First, acquirers and independent sales organisations do not typically publish their prices and their pricing structures and approaches to headline rates vary significantly. This makes it difficult for a merchant to compare prices for independent sales organisations, acquirers and payment facilitators.

Second, the indefinite duration of acquirer and payment facilitator contracts for card-acquiring services do not provide a clear trigger for merchants to think about searching for another provider and switching.

And third, POS terminals and POS terminal contracts can prevent or discourage merchants from searching and switching provider of card-acquiring services. Merchants may need a new POS terminal if they switch their card-acquiring service provider but could incur a significant early termination fee cancelling their existing POS terminal contract.

The report found that possible solutions, such as such as limiting the duration of contracts or making POS terminals more portable, would be straightforward to implement. Faced with a lack of transparency, the PSR’s proposed remedy is to enable and enhance price comparison tools and require acquirers to provide pricing information in easily comparable format.

The Power and Importance of Card Reward Points

A survey commissioned by Slickdeals highlights the power of reward points in motivating consumers, an area that cash hardly touches. Americans are reported to save an average of $757 per year using credit card rewards. The survey says 74% of Americans use their cards enough to hit the minimum spend requirement to receive reward benefits and points.

Americans hold an average of three credit cards each. The survey found over half (53%) of respondents experienced things for the first time ever because of a reward from their credit card, while 55% of cardholders have used rewards to almost entirely pay for a vacation, including cashing in on airline points for five-hour flights on average.

1 - 3D Secure (3-domain structure), also known as a payer authentication, is a security protocol that helps to prevent fraud in online credit and debit card transactions initiated and created by Visa and MasterCard.