The pandemic shows a need for better payment testing

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The COVID-19 crisis will have a profound and long-term impact on people, processes and policies across the globe. The payments industry is already experiencing significant pandemic-related issues, with others sure to surface before we begin to recover. While the current level of uncertainty makes it impossible to predict what the “new normal” will be, we are starting to see indications of where the market is heading.

In addition to these consumer driven changes, there will likely be new legal and regulatory requirements for the payment industry. There is no question that payments are an “essential service” that must be preserved during an emergency, but we should expect regulators to demand that the industry enhance protection plans and protocols for consumers and employees, boost data privacy and security efforts, as well as increase Business Continuity Plan (BCP) rigor and testing.

In order to survive the current crisis and take advantage of future opportunities, the payments industry must evolve more rapidly. Some organizations have been better prepared than others to navigate through the COVID-19 emergency, but it seems certain that every financial services company will find gaps in their BCP that need to be addressed before “the next time.”

Many companies have yet to take advantage of automation when it comes to testing their payment channels, a commonly overlooked but vitally important area. While there is an investment required to convert from manual testing, the long-term benefits are significant – faster delivery cycles, expanded test coverage, higher quality and reduced costs. Automated systems offer major advantages and will facilitate improvements in many key operational areas.

Other organizations have not integrated their payment channels with the broader enterprise. For many financial institutions, the ATM channel is still perceived to be “different,” sometimes to the point that these resources are physically separated from the general corporate population. No matter what the corporate strategy is for testing, all the payment channels need to be full participants. Open APIs make it easier to integrate disparate systems.

Manual testing and organizational silos do not promote timely execution or internal collaboration. The complexity of payment systems makes automation and integration essential requirements for companies that want to benefit from Agile development techniques and DevOps methodologies where testing is an integral part of the overall delivery process.

Testing is a mission critical activity for the payments industry that must continue even during times of crisis. No change should ever be put into production without being fully tested, and without the capability to test, everything will grind to a halt. That means managers, developers and testers must be able to access the test tools and systems anytime from anywhere. Expect much work to be done in this area post-crisis to ensure that when staff do need to work from home, they have all the hardware, software and connectivity required to be secure and productive.

Because it's difficult to predict disruptive events and their impact, the entire financial services community must redouble its efforts to develop true operational resiliency and ensure that BCPs fully leverage the modern technology solutions available. Making the necessary investments to keep operations running during a service interruption will also provide a distinct competitive advantage when things return to normal.

Contactless payments are going to see a dramatic surge in adoption in the U.S. Think “mobile first” morphing into “contactless first.” While cash and checks are not going away tomorrow, usage will almost certainly decrease because of changes in consumer behavior precipitated by the pandemic. In the report “Covid-19, cash, and the future of Payments”, the Bank for International Settlements states: “The Covid-19 pandemic has led to unprecedented public concerns about viral transmission via cash.”

Of course, changes in our relationship with cash will cause a ripple effect, most notably impacting the ATM channel. In the short-term, deployers need to better integrate the ATM “silo” with the rest of the enterprise to improve efficiency and reduce costs. To survive, the ATM must adopt a more modern look and feel, e.g. an “app personality.” Removing existing barriers to the rollout of contactless EMV and adding this functionality ahead of escalating consumer demand will also help ATMs retain their relevance.

A year ago, there was significant pushback from consumers and legislators to the Amazon Go concept. This is likely to change rapidly even after social distancing ends, with shoppers ready to actively seek out and embrace the “just walk out” technology. Other no touch services are sure to see increased adoption as we move forward. Robotic fuel pumps, self-driving cars and drone deliveries are just a few examples.

Already on a steep growth curve, e-commerce, in all its various forms, is sure to expand even more aggressively. This means that e-commerce fraud will also continue to mutate and grow. EMV Secure Remote Commerce and 3-D Secure 2.X, along with other fraud management and mitigation technologies, will experience broader adoption. It is also probable that IoT payments will make a significant leap forward.

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