Preventing fraud plays a significant role in the digital payments space. We must have encountered many frauds, both online and offline, during our lifetime.

Unfortunately, the search for effective methods to eradicate fraud never ends. Fraudsters will always find new methods to commit crimes. There are many tools available to end the same, the latest one being 3-D Secure. 

What is 3-D Secure?

Putting it simply, 3-D Secure is an additional layer of cardholder authorisation added to an online transaction. VISA and Mastercard offer this tool, and it is known as ‘Verified by Visa’ and ‘MasterCard SecureCode,’ respectively.

3-D Secure is a three-sided security system that provides security while performing transactions and transferring payment data amongst 

1.     Issuing Bank
2.     Acquiring Bank
3.     Payment Gateway (link that connects acquirer and issuer)

How does it work?

Several steps are involved when conducting an online transaction. A few additional steps for 3-D Secure can significantly reduce the risk of online fraud:

1.     A cardholder enters payment information on a webpage
2.     Payment provider sends request to check whether 3-D Secure technology is active
3.     If Yes, the customer is redirected to the 3-D Secure page
4.     The cardholder who receives the OTP must enter it in the appropriate field
5.     The result comes in the form of a response to the server of the payment provider
6.     The payment provider sends data to the acquiring bank
7.     The acquiring bank authorises the transaction and informs the customer whether the transaction was successful or not

3-D Secure 1.0 v/s 2.0

3-D Secure 2.0 is replacing 1.0 to provide a better user experience, which will eventually lead to successful transaction conversion. The need to enter static passwords is replaced by other methods such as biometrics in 3D Secure 2.0.

3-DS 2.0 examines over 120 data points. If the transaction is deemed low risk, no further action is required; if the transaction is deemed high risk, 3D Secure requires customers to verify their identity through biometrics or two-factor authentication.

Benefits of 3-DS 2.0

With the 3-DS 2.0 update, customers will have a more fluid experience when conducting transactions on both mobile and desktop/laptop devices. Benefits of the latest update are:

1.     Better User Experience
2.     Increase in Online transactions
3.     Higher conversion rates
4.     Multiple Device support

Conclusion

Security is of the utmost importance, especially when customers conduct online transactions. Today, there is a significant shift toward online transactions, and customers must have mental comfort while making these transactions. 3-DS 2.0 makes the transactions safe, seamless and efficient, while also providing a better user experience.

What is UPI Lite?

The National Payments Corporation of India (NPCI) is working on a new solution called UPI Lite that will allow small digital payments to be made without the need for an active internet connection. The RBI announced on January 5 that digital payments of up to ₹200 could be made without an internet connection.

How does it work?

UPI Lite will allow feature phone users to use their phones to connect to UPI networks and make digital payments directly from their bank accounts. There are currently two key solutions being evaluated. The first is a SIM Overlay, while the second is a software-provisioned solution that will use Over-the-Air (OTA) updates.

SIM Overlay is a technique that extends a phone’s SIM card’s capabilities, allowing payments and other services to be completed even when there is no data connection. On the other hand, OTA will deliver the solution straight to the device’s firmware.

Users will be required to create a 4-digit or a 6-digit pin, depending on the protocols implemented by their banks. Payments made via the SIM overlay technique will be routed through the NPCI’s UPI system to servers operated by the NPCI, and transactions will then take place over the standard UPI network. Instead of using the internet, the entire procedure will run over SMS networks.

How does it affect the Indian ecosystem?

Since the demonetisation of banknotes in 2016, India has experienced a surge in digital payments. According to a survey, tier-II and -III cities in India accounted for more than half of all online transactions in the quarter ending March 2021. In villages and towns, though, cash still reigns supreme.

According to an industry expert, an alternative, secure, low-cost mode of payments with a near-cash-like characteristic will be provided by small value offline mode for digital payments, improving consumer confidence as a preferred option for small retail payments. It has the potential to promote various creative retail payment use cases, such as tickets, product bundling and non-standardised pricing.

Given that feature phones still account for half of the market, this will improve payments in areas where internet penetration is low.

This is not the first time the NPCI has attempted to promote offline payments in rural areas. In 2012, it launched UPI-led offline payments over Unstructured Supplementary Service Data (USSD) networks. However, due to SMS charges, it failed to take off in a large way. 

According to NPCI data, the USSD system was used for transactions worth ₹1.21 lakh in 2021. Around 83 banks were using the USSD system as of December 2021.

If NPCI’s current experiments go as planned, about 350 million feature phone users in India will be able to make digital payments without the need for an internet connection.

India’s e-commerce sector has grown significantly over the past few years and is expected to grow multifold in the coming years. The growth has been driven by increasing internet penetration, rising smartphone adoption, and the growing popularity of online shopping among consumers. The D2C and B2B segments have seen significant growth due to the increasing popularity of online marketplaces, making it easier for businesses to reach customers directly and for buyers to find a wider range of products at competitive prices. The projected growth of the D2C market to US$ 60 billion by FY27 and the overall e-commerce market to US$ 350 billion by 2030 highlights the tremendous potential of the sector in India (according to a recent report published by e-commerce enablement platform Shiprocket in collaboration with CII)

Further, India has seen a boom in smartphone penetration as well as tremendous growth in digital transactions. The number of internet connections in 2021 saw a tremendous growth to 830 million, driven by the ‘Digital India’ programme and the digital transactions in January 23 were close to (in terms of value) INR 12.98 Lk Cr (according to the latest TRAI data).

Given an understanding of the low adoption of mobile penetration in rural areas, assisted commerce was born and is now a full-fledged huge business opportunity for the commerce industry.

The assisted commerce industry is growing rapidly, driven by several factors, including the increasing popularity of mobile messaging apps, the rise of voice assistants, and the growing demand for personalized and seamless shopping experiences.

One of the key benefits of assisted commerce is that it allows businesses to provide 24/7 customer service, without the need for human customer support staff. This can help improve customer satisfaction and reduce costs for businesses.

Assisted commerce is also helping businesses to improve their customer engagement and loyalty by providing personalized recommendations and targeted marketing messages.

Imagine a situation where an individual may require support to make online purchases or conduct transactions- What started as kiosks in tier–3, 4, 5, and 6 towns and villages to help people navigate online government services and promote financial inclusion created a whole new business model.

The goal of assisted commerce is to enable individuals to participate in the digital economy and make purchases independently, by offering some level of assistance.

Assisted commerce can take many forms, depending on the individual’s needs and abilities. For example, helping individuals in rural areas to navigate online shopping platforms, bill payments, and train and bus ticket purchases. Alternatively, it may involve support staff or caregivers assisting individuals with shopping in physical stores or conducting financial transactions.

Assisted commerce is important because it can help promote independence and autonomy for individuals who may otherwise face barriers to participating in the new economy. By providing the necessary support and assistance, individuals with disabilities or the elderly can have greater control over their finances and make purchases that align with their needs and goals.

On this, Prepaid cards can be a very useful tool, as they offer a way for caregivers or support staff to manage and monitor the individual’s spending while still allowing them to make purchases independently. Many prepaid card programs offer features specifically designed for assisted commerce, such as cardholder and caregiver controls.

Some examples of the types of transactions that can happen via Assisted Commerce:

1. Online shopping: Individuals who require assistance to navigate online shopping platforms may receive help from caregivers or support staff to browse products, compare prices, and make purchases.
2. Bill payments: Individuals may require assistance with paying bills (utility/mobile/etc), such as by helping to navigate online payment platforms
3. Banking transactions: Individuals may require assistance with banking transactions by making deposits or withdrawals at a bank branch or through online or mobile banking platforms.
4. Direct money transfers can also be facilitated with the help of assisted commerce. This can involve using a variety of payment methods, such as bank transfers, wire transfers, or mobile payment apps.

We at CARD91 can play an important role in facilitating assisted commerce by providing innovative solutions that will be easier for businesses that may have limited access to banking services. If you’ve any use case, particularly on Assisted Commerce, you may write us at sales@card91.io

Written by Khushboo Bakhru, Senior Manager – Partnerships & Sales