24 February 2018
Pat Carroll


Pat Carroll - ValidSoft

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

How do we achieve 'The Holy Grail' in contactless payments?

28 February 2014  |  3420 views  |  0

Hot on the back of the recent news of Europe’s largest department store group El Corte Inglés taking the plunge towards contactless, yesterday’s Finextra report highlights new figures from WorldPay showing that contactless payments in the UK are rocketing, with 226% more contactless transactions compared to this time last year. This is yet further evidence of the trend in consumer preferences in payment methods, as retailers and the financial services industry wake up to the reality of the growing number of consumers looking to transact with contactless. Consumers want convenience and contactless payment technology for both card and mobile transactions provides the ultimate consumer experience. The big issue with contactless remains the fear of fraud, and for this reason low transaction limits prevail.  The Holy Grail for consumers and merchants alike is convenience with security and not convenience versus security. However, there is no reason why contactless technology cannot be combined with emerging invisible security technologies to address the fraud issue, thereby enabling contactless capability for all card and mobile transaction regardless of transaction value.

The answer to this fraud challenge lies in a mobile, real-time authentication approach to protecting consumers and merchants from fraud, regardless of which channel or protocol is being used. This means innovative ways to authenticate the user whilst maintaining the ease-of-use afforded by contactless payments, effectively replacing the need for PIN or signature.

An example of how this works in practice is already being adopted in Europe where invisible, real-time Proximity Correlation is now being used in the processing of card-present transactions. Proximity Correlation is the ability to leverage the customer’s mobile phone in order to accurately place the legitimate card owner at the origination point of the transaction, in real-time, without any intervention required by the customer.

Combining contactless payment cards or mobile with Proximity Correlation would provide the ultimate in consumer convenience, combined with the ultimate in security for the card payments world. By adding Proximity Correlation to contactless the opportunities for enabling high value transactions becomes compelling, safe in the comfort that the highest level of security is ever present, albeit in an invisible manner. While it is encouraging to see the El Corte developments there appears a real opportunity to widen the capability, offering the ultimate customer experience but for much higher value transactions. The US could take the lead in this whilst it gears itself up for EMV, and could start implementing Proximity Correlation cost effectively today, to the benefit of consumers, merchants and financial parties alike. US issuing banks can take the lead and in so doing, not only protect their clients, but also move ahead of competitors. EMV can follow in due course, and the savings to the industry over the next 2 to 3 years might very well just pay for the investment needed for EMV! Serious food for thought!

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job title Founder/Executive Chairman
location London
member since 2011
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Throughout his career, Pat has been at the forefront of industry thinking, representing organisations on industry bodies and leading participation in industry initiatives. At ValidSoft, he leads the R...

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