The speed at which cross-border digital payments can be processed today is almost staggering. Usually, customers view these instant money transactions as a positive experience. But when there’s a problem, such as fraud or mistaken transaction, then users start questioning the lightning-fast pace of modern payment operations. But by then, it’s that much harder to refund money.
“I believe consumers will only adopt the new payment method if they also feel they’re well protected,” says Thomas Müller, co-founder of Rivero, a multinational scheme compliance, fraud recovery and dispute resolution company.
Co-founder Fatemeh Nikayin joined her partner on the Convergepodcast from the Money20/20 conference in Amsterdam to discuss Rivero’s journey and the current state of fintech.
Partnering with banks
Established in 2019 and headquartered in Switzerland, Rivero is a fast-growing provider of SaaS solutions that protect, scale and streamline payment operations within the highly regulated payments industry. Müller and Nikayin have expanded the company into seven new countries over the past year, while raising money and sustainably growing.
Nikayin explains that Rivero primarily focuses on serving established issuing and acquiring banks as well as card issuing servicing and processing providers
Security of payment operations is essential
With digital payment solutions spreading like wildfire and consumers expecting more seamless experiences, some companies have struggled to adopt protective measures. However, Müller says, such measures are critical. Safety features like multistep authentication can be invaluable for card payment operations.
He notes that the industry’s movement toward authentication has generally been positive and has impacted how some fraudsters and scammers operate.
“Fraud and recovery areas have evolved recently with a stronger emphasis on authenticating card payments,” Müller says. “Since the introduction of strong cardholder authentication or strong customer authentication, it has become harder for fraud … to just steal your credentials.”
The changing face of fraud
Müller now sees bad actors adjusting to the changes in payment operations by focusing on basic swindling to cash in: “accidental” cash transactions and authorized push payment (APP) fraud. One of the more common schemes involves scammers posing as relatives, government officials or bank reps, and then tricking their victims into authorizing irrevocable transactions. In 2023, according to the US Federal Trade Commission’s report, people lost nearly $2.7 billion to this type of scam.
“[The adjustment] has led to somewhat of a shift toward the scam type of fraud, where you are essentially being tricked to pay upfront the wrong person,” Müller says.
He warns that companies implementing faster payments, like contactless cards, just for the sake of speed can lead to a rise in fraudulent activities and more funds disappearing.
“I think you still see very similar fraud patterns that we had a year ago,” Müller says. “However, what we see has changed significantly since last year is the increase of fraud in the non-card payment area and especially talking about the open banking and the account-to-account space.”
Privacy, compliance and security in one
Financial organizations are concerned about customers losing their money to scams and protecting their privacy and security, today and in the future. According to Nikayin, Rivero is committed to helping banks navigate an increasingly complex regulatory world, particularly on the payment network side of the compliance landscape.
Working with big, established companies makes things more standardized, she notes, because the rules of those payment networks serve as guiding principles for the rest of the space.
“Products are built on the rules of the payment network,” Nikayin says. “We don’t have to change much when we enter new markets.”
The service of keeping money safe
Many, particularly European, banks share this concern about customers’ security and privacy compliance, which makes it easier for Rivero to sell its services and establish smooth working relationships with its business clients.
“We’re fortunate to use a security and privacy mindset, and the banks appreciate it,” Nikayan says. “If you talk with a bank and you have an answer to all those questions about compliance and security and privacy, then it makes it much easier to work with them.”
Transforming Europe’s transactions process
The generally held belief is that fintech and digital payments would benefit from widespread standardization. Rivero’s leaders note some of the main efforts to bring order to their relatively young service industry.
Claiming to create a new standard for payments across the continent, the European Payments Initiative (EPI) is pursuing a system and interbank network to rival Mastercard and Visa. The goal is to eventually replace national European payment schemes. EPI leverages the instant account-to-account payments exchange infrastructure available in the EU to improve efficiency and remove intermediaries in the payment flow.
“I would say it’s still way too early to tell if they will be successful with their grand ambition. I mean, they’re only about to really launch the peer-to-peer functionality of their wallet,” Müller explains. “So there’s still a lot to happen to really even start rivaling other solutions.”
Sustainable growth calls going slow on AI
One area that has, at times, been considered overly ambitious is the dizzying rate at which financial institutions have taken up AI solutions. According to Müller, there’s a rush to automate and adopt AI.
Citing the case of an airline chatbot that “hallucinated” a refund payment for a customer, which the organization was then forced to pay, Müller notes that the industry is now on alert to such issues and is more cautious.
“We get asked quite often whether we are powered by a large language model, and then we always say, ‘No, it’s actually even better: It’s powered by human intelligence,’” Müller says.
What’s more, Müller sees a more cautious approach from fintech investors, who search for and choose companies that have a more sustainable business model rather than “growth at all costs and move fast, break things” of the past decade.
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.
*The information shared on this blog is for informational purposes only and should not be considered financial advice. Please note that the opinions expressed on Converge are solely the opinions of the host and the guests, not Convera’s.
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