Transactions Interrupted …Exploring issues …

September 14, 2011

Online Payment Facility

• Indians have the widest range in the world …– Credit Cards, ATM Cards, Debit Cards, Net

Banking, IVR Payments, Mobile Payments, Cash Cards and COD.

• It is a blessing … and a curse.

Creating Trust

• As the industry has grown, so has fraud.• If there is no customer trust while making online

payments, eCommerce dies.• There is belief that to combat fraud one must put in

more and more authentication processes.• Can we walk the fine line between simplifying the

online payment process and preventing fraud from taking place?

ePayments today

Simple Transaction ProcessBetter Usability

Fraud Prevention ProcessBarriers to Complete

Credit Card = VBV / MSCATM Card = ATM PINNet Banking = Password + Second FactorIVR = OTP

ePayments today

Simple Transaction ProcessBetter Usability

Fraud Prevention ProcessBarriers to Complete

Card CompaniesRegulatorBanks

Credit Card = VBV / MSCATM Card = ATM PINNet Banking = Password + Second FactorIVR = OTP

Book on Flipkart using ICICI Net Banking

Net Banking User Name/ Net Banking Password

OTP to Regd. Mobile Phone

Wait for OTP / Enter OTP #

/ ATM PIN #16 digit ATM Card #

Enter Random Numbers on Grid printed Behind the Debit Card

ePayments today

Simple Transaction ProcessBetter Usability

Fraud Prevention ProcessBarriers to Complete

Shopping at the Apple Store

Click to BuyEnter ID PasswordDone

Other side of the transaction

• Transaction Failed / Account Debited• Transaction Cancelled/ Refund Awaited• Transaction Modified / Partial Refund Awaited

• Browser compatibility: Payment pages on many bank websites are not cross browser compatible. This is true with some of the popular browsers as well. This leads to customer not being able to complete the transaction.

A look at the issues with Net Banking …

• Any-time Status Query: Due to multiple hops involved in a net-banking transaction there is a possibility of transaction dropping.

• Currently we have to rely upon the reconciliation sheets which are delivered on the next business day.

• This not only leads to loss of business for some merchants (especially merchants who give immediate product/service delivery against payment)

• This is also in conflict with the whole idea of real-time online payments processing.

• This can be avoided if the Server to Server “Any-time Status Query” facility is provided by the banks.

Technology and Access Issues …

• Reason codes for failures: If a transaction is declined by a bank the exact reason for failure is not provided. For instance, if a customer is trying to make a payment and his transaction is declined due to insufficient funds or invalid credentials, payment service provider is not sending us the status indicating so.

• Multiple charge for a single transaction: Some banks charge multiple times for a single transaction due to flaws in their banking solutions/processes.

• Scaling Issues: Core Banking Solutions of some banks cannot keep up with the increase in transaction load and require down time rescues frequently.

Communications and Technology Issues …

• No Downtime intimation: There are some banks which have frequent downtimes. Information related to these downtimes is not always intimated to the service providers/merchants. This leads to customer dissatisfaction. If we are informed about the downtimes beforehand we can take an informed action.

• Poor Support: Currently the level of support for transactions related queries offered by banks is minimal. This creates problems for payment service providers/merchants to address the customer queries.

Communication and Support Issues …

Manual Processes: Refund Issues …

REFUND PROCESS FOR DEBIT CARDS/NET BANKING IS INEFFICIENT AND LARGELY MANUAL …

PG BankMerchantCustomer Customer

account

1. Requests refund

2. Initiate refund

3. Bank informed through bank specific process

4. Approval sent to branch manager

5. Manual refund into account

Branch manager

Batch

processing

done

adding to

delay

4. Some banks refund directly into account

BankMerchant PG

Customer

1. Requests charging

2. Initiate charging

3. Process charging

4. Ack5. Ack6. Ack

30 sec - 3 mins

7 days or more!!

Charging process

Refund process

… CAUSING INCONVENIENCE TO THE CUSTOMER AND THE MERCHANT ALIKE

• Transaction ID for Refunds: Some banks do not ask for the transaction ID at the time of refunding the transaction. All they need is the amount to be refunded and the customer account number to which the amount is to be credited.

• Ideally, we feel that any refund should be mapped to a transaction ID and as a 3rd party payment service provider we should not be required to maintain customer account numbers for each transaction.

• This process reduces security and is highly susceptible to error, both human and system.

Process Issues …

• Cap on Refunds: Many banks allow multiple refunds to be initiated for a single transaction. Each bank has its own way of handling multiple refunds. However, we have noticed that some banks do not have a check to ensure that the sum of all refunds initiated against a transaction does not exceed the transaction amount.

Process Issues …

• Refund Acknowledgement Reference Number: There are many banks which do not provide acknowledgement /confirmation of refunds processed.

• Not all banks which provide acknowledgements share the refund reference number. Refund reference number is essential as it is a concrete proof of refund being processed. Moreover, we too can map the refund reference number to the transaction ID in the system.

• For eg. Syndicate Bank has a very good refund process in place. They accept refund requests through an API. Moreover, the amount is credited into the customer’s account and refund reference number is provided instantly

Process Issues …

– Payment pages must be compatible with all popular browsers.

– Automate all key manual processes. Provide facility to query the status of any transaction at any time.

– Implement API calls for refunds. – Appropriate reason codes must be provided by the banks.

System flaws like multiple charges for a single transaction must be addressed on priority.

Best Practice Wish List … Technology

– Provide refund reference numbers for every refund.– Cap refund amount to the transaction amount.– Allow multiple refunds on a single transaction

without any charge for refunds .– Upgrade and scale up the Bank’s software and

hardware to ensure minimal drop in transactions.

Best Practice Wish List … Technology

– Implement best practices for better communication with the Merchants and PG Intermediaries.

– Put in the requisite resources in terms of manpower and processes to improve service levels.

– Reduce Refund turnaround time from current average of 3-4 days to 1 day. Automation will help tremendously.

• Proper process to communicate any downtime must be implemented.

• Ideally all banks must provide 24x7 support for all the issues.

Best Practice Wish List … Service

Taking these measures will help improve customer confidence and help eCommerce grow

Transactions Interrupted … the final word

Your Bank

Account

ATM CARD

ATM pin

DEBIT CARD

VBV / MSC

NET BANKINGACCOUNT

Password +2nd Factor

IVRS

OTP

RUPAY

Password +2nd Factor

IMPSMMID +IMPS Pin

If everything is ultimately hitting the bank account, why not have a strong, unbreakable, Single Authentication PW across all instruments? Till then …

THANK YOU