The payments landscape is undergoing a profound transformation as consumer preferences continue to evolve, with digital payments rising in prominence as the preferred method for conducting financial transactions. However, as the digital payments ecosystem expands, ensuring the security of customer payment information remains a paramount concern.
Addressing fraud and enhancing security measures has become increasingly vital with tokenisation emerging as a crucial tool for safeguarding digital payments, whether they occur in physical retail stores at the point of sale or take place virtually.
To gain valuable insights into these trends and challenges, The Fintech Times turned to Valeri Vanourek, vice president of digital payments at Discover® Global Network, a seasoned professional with more than 17 years of experience in the industry.
Her journey began on the issuing side, primarily focusing on the Discover Card issuer team, before a transition to the network division, where she has played a role in managing various digital products, such as overseeing tokenisation efforts and the development of the tokenisation platform at Discover® Global Network. Vanourek also collaborates closely with major digital wallet providers, including Apple Pay, Samsung Pay and Google Pay.
Valeri, please share your perspectives on the latest trends and innovations in the payments industry
Digital e-commerce volumes continue to grow, alongside the shift to mobile and digital wallets. Network tokens and stored payment token usage are also on the rise. As a result, our focus remains on combating fraud and enhancing security. In 2024, there are three significant factors we will be concentrating on:
- On top of mind for us, is always ‘how to protect the payments and customer data at the same time’. This is closely tied to merchant concerns about friction in the checkout process. Thus, it’s vital to strike a balance between providing an excellent customer experience and ensuring confidence in transaction authentication and decisioning. Merchants must ensure that the checkout process is quick, efficient, and secure, benefiting all parties involved.
- Regulations, particularly those related to tokenisation, data localisation, strong customer authentication, and the EU, continue to be areas of our focus.
- Last, but not least, is a focus on compliance and risk management. Perhaps these are the least sexy or captivating topics, when you’re working in payments, but it is of such critical importance. For instance, Payment Card Industry (PCI) 4.0, which provides guidelines for securing systems involved in processing, storing, and transmitting credit card data, is significantly impacting many within the industry and the broader ecosystem. We are committed to improving payment security and implementing internal controls, policies, and processes to ensure the security and encryption of transaction data, whether it involves wallet transactions or sharing transaction data to combat fraud. This commitment extends beyond our cardholders to benefit everyone in the payments ecosystem. We are equally dedicated to compliance and risk management this year.
How do you balance being more innovative, while keeping security and fraud at the foremost?
We have the fundamentals of transaction processing in place, which is essential for us to maintain, of course. However, this foundation allows us to partner with others or concentrate on a multi-cryptogram strategy, multifactor authentication, and improving transaction security. I often liken fraudsters to a game of Whack a Mole. The moment you address one issue, another pops up, and then another, and it’s a continuous challenge. But having these fundamental foundations in place makes it easier for us to shift our focus and adapt to new methods or methodologies as needed.
How has tokenisation influenced security concerns?
Network tokenisation has had a dual impact. Firstly, it has enhanced security by introducing an alternative payment credential, reducing the exposure of a customer’s payment information across the ecosystem, and adding an extra layer of security based on the cryptogram linked to the transaction. Secondly, it offers significant benefits to card members. For instance, in the event of a card being lost or stolen, the payment experience for recurring bills or digital wallets remains uninterrupted. The associated account number is automatically updated, reducing friction and improving overall security. I view it as a win-win-win situation for merchants, cardholders, the network, and the issuer.
How do you keep on top of emerging trends like Internet of Things (IoT) and connected payments through various channels?
It’s not always straightforward, and it requires ongoing attention. However, as I mentioned earlier, we have a solid foundation in place, which will always serve as the basis for supporting emerging trends. Whether it’s the way we provision a network stored payment token or the fraud checks we conduct, our objective is to ensure that customers consistently enjoy a seamless transaction experience. We continue to invest in our tokenisation platform and authentication capabilities, as these form the fundamental layer that enables the adoption of emerging payment methods. You mentioned IoT and connected cars as examples, and indeed, more innovations will continue to emerge. One advantage we have is our strong focus on partnerships. By collaborating with various stakeholders, we gain insights into the evolving payment ecosystem and can closely monitor these trends as they mature and evolve. So, while staying informed is essential in the payments industry, our commitment to partnerships proves to be especially beneficial in this regard.
How important is collaboration within the industry?
Collaboration is absolutely essential, as the saying goes, ‘it takes a village’. In my evolving role, I’ve come to understand that I never work alone. This holds true for my product owners and engineers as well; we function as a cohesive unit. Whether we’re focusing on internal business partnerships or external collaborations, our approach remains consistent when it comes to combating fraud.
Some of the companies we partner with have a strong focus on innovation, which greatly facilitates shared learning and the creation of collaborative opportunities. Through the exchange of data and insights, we can identify instances of fraud earlier and respond to them with greater speed and effectiveness. Furthermore, this collaborative effort helps us uncover new threats and vulnerabilities.
Sharing data between merchants and issuers in real-time is also of paramount importance. This enables more informed decision-making, resulting in reduced false declines, higher approval rates, and increased confidence among issuers in the identity of all customers.
The critical significance of data protection controls, policies, and procedures cannot be overstated. We are unwavering in our commitment to maintaining the security and privacy of data. Whether it’s safeguarding against PCI DSS compliance requirements, managing risks associated with various types of data, or implementing industry-standard encryption during data processing, storage, and transportation, we approach data sharing with the utmost seriousness. I recognise that this commitment is shared by many others within the ecosystem as well.
What else do you expect to see in 2024?
We expect to see a continued surge in partnership-driven innovations within the payment industry. At Discover Global Network, we love working with our partners, as new and cutting-edge solutions are being developed and brought to market, capitalising and leveraging the power of day one. It remains to be seen what we will see coming as we move through the year, but we’re excited to be there with our partners.
Take for example, the launch of Amazon One and the ability able to wave your palm and make a contactless payment; it’s so innovative and such an easy way to pay, and our teams were so proud to participate in that and it really drives satisfaction and fulfilment.
Looking ahead, we expect significant advancements in payment decisioning. For instance, Discover Enhanced Decisioning, our free fraud management solution, enables merchants to share enhanced customer and transaction data, real-time with issuers, via ISO or API . This feature empowers issuers to make more informed decisions when approving or declining transactions, resulting in a reduction of false declines and an increase in authorisation rates.
By enabling data and increased collaboration among merchants and issuers, we aim to improve authorisation decision quality and lower fraud. With lower false positives and improved approval rates, we believe no issuer or merchant would want to miss out on these benefits.
