Communication Key Across Payments’ Changing Landscape

It is, of course, obvious that the internet has changed how the world gets its information and conducts its commerce, but the specters of fraud and data breaches are keeping the latter from reaching its true potential online.

In a recent talk with a PYMNTS’ audience, InterComputer’s President and CEO Scott Volmar delved into the ways the internet has evolved to change the way people and businesses interact, but how threats have evolved in lockstep.   

Millennials and Generation Y have grown up with cybercrime, the executive stated, and parents must have “another type of talk” with their kids: the online safety and security talk, as Volmar termed it.

For businesses, 2014 was “the wakeup call” and a “banner year for internet crime.” In just one example, Target reported $152 million in breach-related expenses, and Home Depot reported $53 million in similar expenses, with both firm’s costs only partly offset by insurance recoveries and reputations damaged in the process.

Only incremental efforts have been made to ensure that transactions can be made across the internet in a safe manner, said Volmar, “and until now, every one of them has been defeated by cybercriminals.”  

The key, he said, “is to change our mindset and our strategy.” Two key pillars to do just that would include “unique, strong digital identities” for firms, for their employees and for consumers, and there also needs to be a centralized and unified digital messaging system for transactions, known as “hosted-distributed architecture.”

Without such measures in place, he said, the dangers of transacting on the web have strangled the growth of eCommerce, with digital transactions at less than 20 percent of their potential volume. He said his own company, InterComputer, offers PrivateLine software “and an insured, secured, multilayered messaging platform that never touches” the internet, while enforcing digital identities and regulations across every message between parties. Messaging occurs across a real-time, bank-to-bank payment system and is designed also to work with third-party financial institutions or even third-party, non-financial institutions.

And in a separate interview with PYMNTS, Volmar said that in terms of larger trends, the shift to EMV for credit cards might be seen as among the biggest changes in the industry in the past few years, with the added layer of protection via token. 

But that protection, he added, “is not totally reliable, because the encryption on it is so light and the token can be broken.” 

“Tokens are patterns,” he said, “and patterns can be predicted.”  

The other innovation seen in the past year, he added, centers on Federal Reserve activity and mobile payments “in that they are spearheading a move to move the entire industry and the consumers and the businesses to a real-time payment model.”

When asked what innovation he expected but had not yet seen, Volmar replied, “I would have thought that there would have been U.S. dollar payments via mobile phone versus, say, a cash card from Walmart or some of the other retailers.” 

And as for payments writ a bit smaller, Volmar stated that there are challenges for financial services in firms that are operating within silos or attempting to maintain market share. But they must “navigate this new environment of FinTech” and regulatory charters that allow FinTech firms to become depository institutions or money transferring entities.

“These are shockwaves in the industry,” he noted. 

Volmar also addressed the issue of whether bolstered communications can help businesses avoid mishaps and missed profits. As for the biggest pain point in the industry, Volmar cited lack of infrastructure, which leads to a lack of communication between firms, which can lead to detrimental outcomes. The evolution should move toward one where “systems are talking to one another … books to books if you want to refer to it that way or ERPP system to ERP system, clear down to Peachtree or QuickBooks for a small business. The ability to interact is not there because the trust is not there.” 

Business owners need to know that when they interact and transact with corporate peers or customers, they can do so knowing the limits of that interaction and there will not be new vulnerabilities cropping up. Even larger companies have been using EDI technology from the 1970s, he said. There’s the need for big companies to talk to medium-sized companies to talk to smaller companies. Among verticals that need modernization and expanded communication, he pointed to health care.

“Silo problems are there, too,” he said. “You have large software providers for hospital management” and electronic medical records are being generated, but the difficulty lies in “crossing those medical organizations boundaries and systems … That data is going to be sent safely to the proper recipient.”

The system also is robust across mobile devices, and he noted that mobile is key to eCommerce growth.

He said products such as InterComputer’s Contextual Chat software allows all parties involved in a transaction to see the same information at the same time and resolve differences, should they arise, with insight and clarity, “walking with a transaction from end to end, paperless.”