Advocating for a non-discriminatory payments system

posted by Dan Kramer on Wednesday, April 17, 2019 in SHAZAM Blog

As a member of the Secure Payments Partnership, SHAZAM collaborates with retail groups and other payment networks that are committed to greater security and open standards across the payments system. We support sound policies that improve the payments infrastructure, meet the evolving needs of commerce and provide convenience and security to businesses and consumers. If we weren’t advocating for these issues, the payments landscape would be significantly altered. Costs will continue to increase, and a handful of mega networks will be in control.

Our advocacy efforts as a member of the SPP support community financial institutions across the country:

Strong user authentication

It seems as though we’re headed in the wrong direction related to in-person, non-PIN purchases. The last form of authentication, the customer’s signature, has been eliminated as a requirement to complete a transaction. As a result, these transactions are fast becoming the Wild West for thieves.

To ensure security of the payments system, it’s important to authenticate the identity of each person making a payment. There are numerous ways to do this, both in-person and online, yet very few are enforced by the card networks across the payments system. A personal identification number is, and continues to be, the only payment authentication method where the consumer is authenticated by the financial institution.

While the implementation of biometrics — fingerprints, facial recognition, etc. — are used to authenticate a consumer to a device, that biometric data itself isn’t sent to the issuer to verify the consumer. The transaction is authenticated based only on the device authentication. The drive for strong authentication must not end. Technology advancements that allow financial institutions and merchants to implement solutions to reduce fraud must continue.

Open security and implementation standards

The payments system is complex and comprised of many players who have expertise and should play a role in establishing card security standards that provide equal and fair access. Implementing such standards is important because they establish guidelines for anyone involved in the payments process — from designing payment devices to accepting or processing payments.

Today, many security standards are dictated and enforced by the major card networks. This results in a system of proprietary standards that squelches innovation and competition. By supporting a system of open standards, businesses and consumers benefit.

Payment security innovation

Payment technologies take many different forms and we must continue to ensure the payments system uses the best security technology available and continually seeks new solutions. Technologies such as mobile and wearable payments, biometrics, geolocation, IP verification, blockchain, ultrasonic sound waves and others will continue to evolve and it’s critical payment security evolves as well.

Supporting innovative technologies that drive the U.S. payments system forward and make U.S. transactions the most secure in the world is vital to the payments system. SHAZAM is not only actively involved in exploring these technologies to ensure our clients have access to them, but we’re also advocating for the interests of community financial institutions at the federal level.

Network routing competition

Every payments card — debit or credit —should have multiple networks enabled to process transactions. Doing so will foster innovation, help contain costs and more importantly system redundancies can be established. If one network goes down, transactions can still be processed on another network. In addition, requiring multiple networks promotes innovation and security advancements as networks compete for business.

With many industries working together to enhance the U.S. payments system, the result is choice and flexibility for community financial institutions. SHAZAM advocates for standards that promote innovation and competition, resulting in a more secure and ubiquitous payments system.


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