New Technologies at the forefront of the fight against fraud
The traditional way of making payments online is changing for the better with online banking payments that offer faster approval and better fraud protection, in the likes of the Pay n Play technology by Trustly.
Online banking payments are not alone in this new trend of updated purchase methods and habits. Contactless payments and buy now pay later (BNPL) options have all seen an increase in use this past year. That’s in no doubt partly due to the pandemic, but it also signifies a shift in the way consumers want to make their purchases.
Credit Card Use Is Declining, Online Banking Payments and Debit Cards Are Rising
Credit card use is in decline. People are more comfortable spending money they actually have. This helps to avoid debt and the obligation of making future payments, but also in part because making the payment directly is simpler.
Debit cards offer something credit cards don’t: simplicity. There are benefits to using credit cards, of course, and many large purchases (e.g., buying a car) rely on credit. But in comparison, debit and direct online banking payments offer instant completion with zero complications.
Online Banking Payments Are Less Likely to Be Declined, Reducing Costs for Merchants
Not only merchants benefit from online banking payments’ reduction in costs. Issuing banks, cardholders, and acquirers also see a reduction.
It seems fees for cardholders have gone out the window years ago, but that’s not true for every banking institution. When a card is declined, many banks still charge a small fee to the cardholder. What’s worse, these fees are issued even when there is no fault to the purchaser.
The 5-party Model Is Flawed and Easily Corruptible
The traditional 5-party model for making purchases on a card is inherently flawed. This model involves connecting the merchant through a gateway to an acquirer, to the card network, to the bank, and all the way back. There are so many leaps and bounds that this model leaves many access points for fraudsters to get ahold of card or account details.
More often, though, is that cards are declined for no apparent reason. When this happens and beyond the monetary fees, the customer experience is shot. Customers are less likely to continue making purchases with a merchant when their card is declined. This equals a much larger loss in revenue for merchants.
This model may well affect online casino payments, which were under fire in Germany earlier this year. Luckily, a new 3-party model is available and promises to alleviate these concerns.
The Alternative 3-party Model of Online Banking Payments Is More Secure
A new 3-party model is available by Trustly. In this method, there are only three connections to make for a transaction to be authorized: the purchaser, the merchant, and Trustly.
This year, alone, Trustly has seen some great changes after appointing a new chairman in February.
With this new model, online banking payments are more secure, faster, and more likely to improve customer retention through a better purchasing experience. Online banking payments are finally improving and giving credit cards a run for their money.