As e-commerce accelerated in 2020 with the global pandemic, Latin Americans rapidly adopted online shopping habits. Now, in the “new normal”, fintechs, banks and merchants need to prioritize secure payment and online shopping experiences, to protect their customers – and their own businesses.
In this exclusive interview, Jorge Arbesú, VP of Cyber and Intelligence for Latin America and the Caribbean at Mastercard, explains the digital security landscape in 2021, and how merchants, banks and fintech can promote safer digital experiences.
How have people in Latin America and the Caribbean come to understand digital security since the pandemic began?
E-commerce was already growing exponentially in Latin America and the Caribbean in recent years due to digital natives such as Millennials and Gen Z reaching adulthood. Also, the supply of digital services diversified, from cab services to supermarkets, which can now be accessed online. Add to that the lockdowns resulting from the pandemic, and we see another accelerating factor.
Consumers who had been confined to their homes had to go online to access essential goods, forcing them to adopt digital consumer habits, educate themselves on how to be a digital consumer and now enjoy the benefits that digital products bring. People who had been skeptical of e-commerce in the past due to security concerns were compelled to make online purchases for the first time. As they realized it was secure, they quickly changed their perception, generating high levels of trust. In cases of attempted fraud, users noted that they were quickly taken care of thanks to a solid ecosystem that supports them.
How do you expect public perception around digital security to evolve this year?
Consumers will continue to demand a payment experience that is secure and convenient, just as they are used to in the physical world. No matter where or how they pay, they expect security they can trust. I would expect to see accelerated growth, especially considering trends among younger consumers who were already active – they went from shopping online 50% of the time to 90% – and now are almost completely digital. Likewise, older generations were forced to learn and acquire more digital skills, and those who lacked internet access quickly obtained smartphones to conduct online transactions, going digital in a short period of time.
What can online merchants, banks and fintechs do to further promote secure digital financial experiences?
Educating consumers about new technologies, such as artificial intelligence and passive biometric authentication, can enable e-commerce to spread to more households, converting those who still shop rarely into frequent online shoppers, once they know they can trust the system.
How can banks and fintechs better protect their corporate customers from fraud and chargebacks?
The latest technologies and industry standards for digital security are already present and available in the region. Mastercard’s Digital Security Guide consists of a set of initiatives, guidelines and tools created to accelerate the adoption of cutting-edge technologies that are necessary for both financial institutions and retailers to stay current in the e-commerce space in a secure and simple manner.
The Digital Security Guide focuses on authentication and tokenization technologies. With the use of tokenization and solutions such as Mastercard Digital Enablement Service (MDES) and MDES for Merchants (M4M), Mastercard is reducing the chances of fraud. MDES helps issuing banks and merchants keep their consumers’ online data secure by replacing it with an alternative number – a 16-digit “token” that mimics the actual credit card number and can only be used once. In the event of a security breach, fraudsters would only have access to the token rather than the consumer’s payment information, reducing the possibility of fraud.
In addition, authentication technologies enable retailers and banks to ensure that online shoppers are who they say they are. Authentication solutions such as Mastercard’s NuDetect use machine learning to analyze “passive biometric factors” – how a person types, holds the phone, moves the mouse, or where they are when using the phone – to anticipate and prevent fraudulent online payments. The user verification process takes place without introducing any friction or interruption to the transaction.
Globally, we produce massive amounts of data every second. How can banks, fintechs and e-commerce companies use the right data in the right way to protect their digital operations?
Mastercard’s approach to security starts with data at its core. Access to data has become widely available, so the opportunity lies in analyzing and processing the data, using technologies such as artificial intelligence to turn it into actionable information. We are using this technology for critical areas such as credit risk, helping banks make better payment approval decisions and reducing risk exposure. On the other hand, this wide availability of data also requires greater security to keep it protected.
Banks, fintechs and other industry players can protect that data through the latest payment solutions and industry standards such as tokenization, authentication and 3DS. This ensures that user data is protected, encrypted and standardized when shared across the ecosystem.
What are some of the unexpected weaknesses in digital security that digital finance providers should try to protect?
Security now depends on many more businesses and applications, leaving the entire chain at the mercy of individual and multiple security measures. However, with Mastercard’s pioneering scanning and assessment technologies, organizations can proactively manage cyber risks, and better safeguard critical intellectual property and consumer data along with payment information. RiskRecon is a critical application that supports the cyber security strategy and a solution that relies entirely on automated passive and public techniques to discover assets, score performance and prioritize risks.
How can banks and fintechs ensure that the entire processing chain of a digital transaction is secure?
By securing data through tokenization, authentication and 3DS. These solutions guarantee the protection of user data throughout the entire process. Authentication technologies enable faster identification of users, and tokenization protects card data through a sixteen-digit code that can only be accessed once (in the event of fraud, hackers only have access to this number, which protects payment information and preserves the transaction). On the other hand, banks and fintechs are turning to Artificial Intelligence to identify behavioral patterns that help streamline operations and reduce credit risk.
Which aspects of digital security are you most excited about heading into 2021 and why?
The acceleration of digital transformation and the new consumer behavior in the region encourages us to make Latin America an e-commerce role model. With an infrastructure in place for the modern payments landscape, we are ideally positioned to continue to deliver secure, seamless payment experiences to consumers, whether in person or online.
Also, as e-commerce continues to grow in the region, we want to move from playing defense to being proactive when it comes to online security, by promoting the adoption of the latest technologies in new sectors such as healthcare facilities, which can also be affected by cybercriminals.
This interview is part of a series on digital finance, conducted in collaboration with Mastercard. Explore the full series here.