Data is valuable.
But only in context, because data can tell a story, or stories, worthy of examination.
Several times throughout the year we offer Data Drivers, where our interviews with payments professionals help the numbers take shape, take on meaning, illustrate trends and even hint a bit at the future.
And, as always, the end the year provides a chance to look back at some of the numbers that told stories. Themes emerged, some frightening – as when it comes to getting a sense of the impact of payments fraud – and some hopeful, as evidenced in, say, businesses finally moving toward killing the check.
Good vs. Bad
It may seem like 2018 was the year of the fraudster, of bad guys and gals acting in concert to steal money, steal privacy and use data for any number of gains. We’ll throw a few names out. Marriott. Saks. Lord & Taylor, Panera and, of course, Facebook. In short, cumulatively, hundreds of millions of records breached.
David Divitt, vice president of financial crime products at Vocalink, told PYMNTS’ Karen Webster that $1.45 trillion of losses accrue for businesses, and roughly half of firms are victims of financial crime. Perhaps not surprisingly, financial crime and cybercrime are the biggest offenses.
“It seems like every time somebody does some research on this topic,” observed Divitt, “the numbers tend to grow.”
And, as of now and looking ahead, among the more prevalent criminal methods focused on business, according to Divitt: new relationship fraud. He described this as a “group of both business email compromise, BEC as it’s called, or CEO fraud.”
So beware, or at least view skeptically, what is in your inbox.
There may be light at the end of the tunnel, though, through the advancements of technology – and specifically, through Big Data and artificial intelligence.
“Being able to take these masses of different data points in real time and make calculations is very doable,” Divitt told PYMNTS, “and that is how you are able to stay at the [same] speed of the real-time systems and … the criminals.”
Other tech, he said, can offer arrows in the anti-fraud quiver, too. Device biometrics can examine, monitor and answer some key questions: “How do you hold your phone when you are logging into a mobile banking app? What speed or pressure are you typing with on your screen? All of these data points are available and can be used to build up a picture of how you interact with those apps,” he told Webster. “That can happen all the time in the background, without you even realizing it. … It is much more difficult for the criminals to mask relationships [between users and tech, and even between parties in a given transactional relationship] than it is for them to pretend to be ‘normal.’”
All the world’s a stage, to quote the Bard, and it seems not much in the world is certain, with volatility seemingly the name of any game in 2018, from geopolitics to cryptocurrencies to stock markets.
Against that backdrop, and when it comes to payments, currencies can be volatile, too. And as Karl Schamotta, chief market strategist at Cambridge Global Payments, told us of volatility: “It’s sort of the new normal and the old normal at the same time.” We’ve been here before, it seems, with the currency and emerging market crises of the 1990s, and with the fledgling trade wars and political shifts of the early 21st century.
For corporate treasurers and cash managers grappling with currency volatility, “the primary strategy is to have a strategy,” Schamotta said, “rather than hope the exchange rates move in your favor.”
A strategy combined with the tools and discipline to execute it over a period of time — software that automatically responds to market triggers, for instance, or an institutional willingness to stomach day-to-day declines in favor of longer-term gains — can lead to volatility-enabled rewards.
A Real-time Change in the Way We Work – and Get Paid
Drilling down a bit from geopolitics, but still eyeing seismic shifts that are worldwide, consider the rise of the global gig economy. The shift toward labor on demand, so to speak, has garnered no shortage of headlines. But the mechanics of bringing project workers together with employers – and facilitating payments – may get less attention. The friction that exists, though, merits some attention.
Hyperwallet’s Michael Ting, senior vice president of digital markets, told PYMNTS that in designing and running the online marketplaces that match workers for hire with hirers, particularly global ones, one size definitely does not fit all. A gap exists, and less than half –44 percent, to be exact – of gig workers get paid through the platform that brings the buyers and sellers together.
And when they do get paid, 51 percent of gig workers receive their money within a week of performing work.
That brings to mind, of course, real-time payments – and in a separate Data Drivers podcast, George Evers, senior vice president of real-time product at Vocalink, told Karen Webster that the gig economy can offer a real tailwind for gig economy workers. More than $1.4 trillion of income was attributable to U.S. gig workers in 2018, according to the PYMNTS Gig Economy Index. That is, indeed, a lot of money changing hands — with cash providing a guiding force for real-time payments adoption.
Eighty-four percent of contract workers, as queried by PYMNTS and as noted in that Data Drivers interview, say they’d do more gig work if they were paid on the same day or the next day – so when it comes to doing more work, speed (of payments) matters. Yet, only 17 percent of platforms are in a position to pay workers as the work is done.
The confluence of changing work habits, real-time payments and the movement away from purely cash conduits of paying and getting paid also has implications for the unbanked populations. In that same interview, Evers noted that there are 1.7 billion unbanked adults in the world, most of them living and working and paying bills in developing economies, such as those in certain parts of Africa and Asia. Tied to the landscape of digital payments, financial inclusion can increase.
Speedier Payments on the Corporate Front
The movement away from cash also brings with it the movement away from checks – you know, the paper kind. Checks? Well, they’re still entrenched in the corporate world, as roughly 50 percent of payments from business are completed through checks. That seems to be changing, as 47 percent of businesses are using same-day ACH credit.
Not bad, but there is room for improvement. Chris Elmore, co-founder of AvidXchange – which provides accounts payable (AP) solutions, bill pay services and accounting software, noted that “we thought this thing was going to take over the world. Frankly, it’s hasn’t.”
Part of the reason is due to transaction size limits of $25,000. But even as Elmore stated that “suppliers hold the keys” in determining how they want to get paid, 59 percent of survey respondents queried by PYMNTS said they would increase the use of SDA credit in 2019 as payables processes are modernized and automated to support this new payments’ flow, among other things.
Looking ahead, the data will continue to tell tales, if you know where to look. And the place to look? Well, it’s right here.