How Cloud Will Feed The Need For Speed In Payments

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As online payment gateway companies continue down the path of digital transformation and cloud migration, it's critical to consider how cloud technology can speed up payments and improve the customer experience.
Instant payments have become the norm for both consumers and businesses, with over three-quarters of merchants expecting real-time payments to eventually replace physical payment cards. Digital payments are expected to reach $6.6 trillion this year, with consumer expectations centered on speed, convenience, and security.

Even as digital payments grow in popularity, they present a unique set of challenges. Slow processing times and lengthy compliance checks are the norm, particularly for organizations still hampered by legacy systems. Many payments organizations, banks, and other financial institutions (FIs) are leveraging cloud technology and APIs for middleware backends while customizing the customer experience on the front end to meet the growing demand for fast payments. Using APIs for real-time connections instead of the traditional daily or weekly batch processes of the past can enable instant payments.

Other ...
... ways cloud technology facilitates faster payments include more efficient data processing and more effective (and efficient) fraud detection and prevention. Some of these are discussed in greater detail below.

Automate Compliance & Security
Compliance is not new to financial institutions and payment companies. Oversight laws such as know-your-customer (KYC) regulations and anti-money laundering (AML) regulations necessitate extensive data collection, which can result in a slow compliance process. Noncompliance is a nonstarter because it not only exposes organizations and their customers to fraudsters and the resulting reputational fallout, but it is also costly. Due to improper AML procedures, financial institutions were fined up to $17 billion in the decade ending in 2019.

Compliance automation not only ensures that regulatory procedures are compliant, but it also improves the speed with which security checks can be performed — especially when compared to the time it takes humans to perform those same checks. Cloud-native solutions make use of API architecture to provide flexibility and automation in compliance management. All aspects of security and compliance can be automated and streamlined, including monitoring, security and compliance checks, deep analysis of threats and vulnerabilities, and remediation.

Unlock the Power of Big Data
Legacy systems create data silos, making it difficult to sift through and use increasing amounts of market data and alternative data sets. Making full use of data for decision making will require leveraging serverless data platforms, machine learning, and open APIs. Data is essential to quick and secure digital payments, whether it's used to personalize the customer experience, improve security, or meet regulatory requirements.

Cloud-based machine learning solutions can help with transaction monitoring and the development of better models. This monitoring can not only help with real-time credit risk decisions, but it can also help to streamline data-driven processes across the organization. Data processing and analysis that is more efficient allows business users to create customized, user-friendly reports that can be seamlessly integrated with third-party visualization tools to analyze and solve data problems.

Real-Time Fraud Risk Analysis, Prevention, and Detection
Predictive cloud technology can be used by financial institutions and the best online payment gateway service providers to run real-time fraud risk analyses and prevent fraud, cyber breaches, and other risks. Machine-learning-based fraud prevention platforms, which identify emerging fraud patterns and correlations in real-time, can simplify and accelerate fraud detection and prevention.

Furthermore, machine learning enables more accurate fraud detection via data lakes capable of supporting identity authentication. Machine learning tools combined with optimized fraud detection algorithms enable payments organizations to increase fraud protections while reducing false positives. These quick and accurate fraud decisions protect against bad actors while also improving the customer experience by eliminating unnecessary friction.

This is related to the ability to automate dispute resolution. Chargebacks are on the rise as digital payments become more prevalent. Chargebacks are often legitimate requests. Some chargebacks, however, are equivalent to fraud, in which a consumer uses the chargeback mechanism to avoid paying for a product or service. By automating chargeback systems, merchants and payment organizations can collect customer data from multiple sources and use machine learning to prove or disprove the legitimacy of a chargeback.

Cloud technologies are the future of payments, and they are here now. As connected devices become more common and customer data floods in from all directions, cloud technology combined with artificial intelligence and machine learning capabilities will hold the keys to the kingdom of faster payments. The cloud can help reduce operational costs while increasing efficiency, making it an ideal replacement for on-premise environments. Cloud technology combined with big data provides payments companies with greater insights into their customers, allowing them to develop highly personalized payment options that will be critical to competing in a growing market.

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