Bet­ter un­der­stand­ing of how you pay on­line

The Daily Star (Lebanon) - - FRONT PAGE - BLOMINVEST COL­UMN

Dig­i­tal pay­ments are surely but steadily gain­ing trac­tion in Le­banon and the MENA re­gion. This is ev­i­denced by the grow­ing num­ber of busi­nesses es­tab­lish­ing on­line pres­ence and/or busi­nesses list­ing their prod­ucts on a mar­ket­place’s on­line shelves. The con­ve­nience and the com­pet­i­tive prices listed on­line are mak­ing on­line pur­chases more ap­peal­ing. The lat­est sur­vey by Arab­net on the e-com­merce ecosys­tem in the MENA re­gion showed that more than 65 per­cent of users are re­peat users.

De­spite gain­ing ap­peal, shop­pers are still wary of on­line pay­ments. Ac­cord­ing to Arab­net, 75 per­cent of sales trans­ac­tions are cash on de­liv­ery in the MENA re­gion. The pref­er­ence to­ward Cash on De­liv­ery is a trend of­ten cited by Le­banese e-com­merce busi­nesses and ex­plained by con­sumers’ hes­i­tance to share credit card in­for­ma­tion with on­line re­tail­ers. On this point, it is worth men­tion­ing that pay­ment gate­ways and on­line mer­chants are not al­lowed to store card in­for­ma­tion as it is strictly against the rules of the card schemes Visa and Master­card. Usu­ally, if the mer­chant is not the provider of the pay­ment gate­way, upon pay­ment, the con­sumer is redi­rected to a sep­a­rate page on which he shares his credit card in­for­ma­tion, which prevents the mer­chant from ac­cess­ing the card in­for­ma­tion and let alone stor­ing it. If the mer­chant is the same as the pay­ment gate­way provider, the pos­si­bil­ity of stor­ing the in­for­ma­tion be­comes more likely, but re­mains il­le­gal and heav­ily pe­nal­ized if de­tected.

Hes­i­tancy to make on­line pay­ments does not mean that shop­pers are not us­ing their credit or debit cards. Many on­line mer­chants are pro­vid­ing their clients with the pos­si­bil­ity of pay­ing upon de­liv­ery through an on-site POS ma­chine. In fact, the ap­petite for credit and debit cards is on the rise as shown by fig­ures from the Cen­tral Bank. Ac­cord­ing to the Cen­tral Bank of Le­banon, the out­stand­ing num­ber of pay­ment cards (credit cards debit cards, charge cards and pre­paid cards) stood at 2.69 mil­lion in June 2018 up by 5 per­cent from the same pe­riod last year.

Per­haps a bet­ter un­der­stand­ing of how pay­ment gate­ways func­tion in Le­banon can make on­line shop­pers a lit­tle more at ease with their on­line ex­pe­ri­ence. Ac­cord­ing to Arab­net’s sur­vey, con­sumer ed­u­ca­tion beats com­pet­i­tive pric­ing as the top chal­lenge in the MENA e-com­merce scene. This proves that, for on­line mer­chants to ap­peal to con­sumers, con­sumers must first fully un­der­stand how to as­sess if the ad­ver­tised safety of a cer­tain web­site is cred­i­ble or not.

Le­banese on­line shop­pers can rest as­sured by the pres­ence of top-notch global pay­ment ser­vices. Cy­ber­source, owned by VISA, and Master­card Pay­ment Gate­way Ser­vices are avail­able in Le­banon. Some gate­way providers in Le­banon are banks, oth­ers part­nered with banks such as Net Com­merce and Credit Libanais and Frans­a­bank, while Areeba is part of M1 Fi­nan­cial Tech­nolo­gies, a sub­sidiary of M1 Group after it had ac­quired Bank Audi’s pay­ment cards and elec­tronic ser­vices divi­sion busi­ness, sys­tems, as­sets and team.

This shows that on­line mer­chants in Le­banon can ben­e­fit from the same pay­ment so­lu­tions ac­ces­si­ble to in­ter­na­tional gi­ants. Cy­ber­source, ex­clu­sively pro­vided by BLOM Bank, is a lead­ing pay­ment gate­way owned by VISA and it is the same pay­ment gate­way used by in­ter­na­tional mer­chants such Ama­zon, E-bay, Face­book and Air France.

In talk­ing about se­cu­rity, the most im­por­tant el­e­ment is fig­ur­ing out how these in­ter­na­tional pay­ment gate­ways en­sure fraud preven­tion. Pay­ment gate­ways pro­vide many so­lu­tions to en­sure the se­cu­rity of the trans­ac­tions; most of the pay­ment gate­ways re­quire en­ter­ing a three-digit num­ber avail­able on the back of the card to en­sure that the card is in the posses­sion of the gen­uine card­holder. In ad­di­tion to this code, pay­ment gate­ways may re­quire a one-time pass­word for each trans­ac­tion. The one-time pass­word is used to make trans­ac­tions more se­cure, since the card­holder is ver­i­fied through a pass­word pro­vided by the is­su­ing bank to the card­holder through SMS or email. The Pay­ment gate­way pro­vided by BLOM, in ad­di­tion to the above, uses ar­ti­fi­cial in­tel­li­gence and ad­vanced risk mod­els to de­tect fraud in real-time. The pay­ment gate­way would an­a­lyze the trans­ac­tion el­e­ments in terms of IP lo­ca­tion, de­vice used, card­holder be­hav­ior in or­der to as­sess the risk and in­form the mer­chant whether to de­cline or pro­ceed with the trans­ac­tion.

Se­cu­rity pro­ce­dures have to be tai­lored in ac­cor­dance with the type of on­line pay­ment. Pay­ment gate­ways have de­signed so­lu­tions for one-off pay­ments but also for re­cur­rent pay­ments. Re­cur­rent pay­ments such as sub­scrip­tions and bill pay­ments are se­cured through To­k­eniza­tion. The To­k­eniza­tion tech­nol­ogy is based on the con­cept of re­plac­ing sen­si­tive data with a non-sen­si­tive el­e­ment, a to­ken, which has no in­trin­sic value. In sim­pler terms, the card num­ber is re­placed with a to­ken which will be used to set­tle fu­ture sub­scrip­tions. Since this to­ken has no value, it will be use­less for the hacker in the case of a breach.

The rev­enues of pay­ment gate­ways pro­vided by the banks are a mix of fixed and vari­able rev­enues. Banks charge vol­ume-based fees to the mer­chants in ad­di­tion to fixed monthly fees. Part of the charged fees goes to the card schemes and the re­main­ing is rev­enue to the bank.

De­spite the im­por­tance of se­cu­rity, it is not the only fac­tor that de­ter­mines the suc­cess of an e-com­merce ven­ture. In fact, cus­tomer re­ten­tion and trust in this field is multi-faceted. From this, it is fair to say that se­cu­rity and per­son­al­iza­tion of the on­line ex­pe­ri­ence are com­ple­men­tary. Fraud preven­tion en­sures that the on­line cus­tomer will have a more se­ri­ous in­tent of mak­ing a pur­chase if he be­lieves it is safe to do so whereas the per­son­al­iza­tion will make the cus­tomer spend more time on the mer­chant’s web­site, buy more be­cause he is of­fered ad­di­tional tai­lor­made sug­ges­tions and, more im­por­tantly, re­turn and rec­om­mend the mer­chant’s web­site. The big­gest proof that cus­tomer sat­is­fac­tion is at the core of achieve­ment in e-com­merce is the smash­ing suc­cess of Ama­zon, a tril­lion-dol­lar com­pany, with the cus­tomer at the heart of its phi­los­o­phy. In or­der to at­tract busi­nesses, pay­ment gate­way providers must there­fore of­fer the mer­chants what’s best for their con­sumers in terms of safety and as­sis­tance.

More­over, cer­tain mer­chants at­tempt a trade-off be­tween cus­tomer sat­is­fac­tion and risk. The Ver­i­fied by Visa and Mas­ter Card Se­cure Code are ad­di­tional se­cu­rity mea­sures cho­sen by some mer­chants and com­pel cus­tomers to pro­vide an ad­di­tional code when shop­ping on­line. Mer­chants such as Ali Ex­press and Book­ing.com do not use these codes which in­di­cates that when it comes to ad­di­tional lay­ers of se­cu­rity, they are left to the dis­cre­tion and strat­egy of the on­line mer­chant; choos­ing be­tween less steps in the check­out ex­pe­ri­ence or ex­tra-lay­ers of se­cu­rity.

From here, it is cru­cial for the on­line mer­chant to un­der­stand what their cus­tomers’ pri­or­i­ties are. The only way to truly un­der­stand the cus­tomer is gath­er­ing data on cus­tomers’ be­hav­ior and pref­er­ences. In­tu­itively, an on­line mer­chant can never go wrong with of­fer­ing the cus­tomer a safe and fast check­out ex­pe­ri­ence in ad­di­tion to a clean, clear user-friendly de­sign and, most of all, on­line and off­line cus­tomer sup­port.

On­line shop­ping has be­come a strong trend in the global mar­ket.

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