7 Major Fintech Challenges to Resolve at Money20/20 Asia
The payments ecosystem in the Asia region is on the rise, with quality solutions and operational support. With disruptive services in risk assessment, settlement options, and customer engagement tactics, fintech is credibly reaching its peak in the region.
When companies attend the Money20/20 event, one of the biggest talking points will be about the various payment challenges faced by businesses. Here, Paywint takes a look at the top seven hurdles that businesses should overcome to generate a streamlined payments model.
Payment Failures
It’s a challenge that eats into the cost management part of a business. The uncertainty covering it means that no phase of the payment lifecycle is free from it. Authorization declines, insufficient funds, subscription failures, and technical issues could be the main contributing factors in this regard. More than 30% of customers will drop a purchase decision over a single failed attempt for successful payment. It is a core operational metric that needs to be maintained effectively to build parameters such as financial performance, customer retention, and approval rates.
Higher Transaction Costs
Digital payments need the support of intermediaries, and these entities could involve higher transaction rates. Banks, card networks, payment processors, fraud detection networks, and compliance surveillance systems all could add to significant margins in the transaction volume and fees. It could create issues in sectors like pricing flexibility and cross-border integrations. Fintech companies should embrace payment routing strategies, pricing agreements, and cost-effective transfers to resolve these problems and promote growth.
Poor Routing Performance
It’s more of a technical problem than a regular financial issue. When a fintech ecosystem has numerous networks and payment rails, the routing system becomes complex to navigate. This could create higher costs of operations and failure to renew system networks. Implementation of intelligent routing networks is the biggest factor that can offer a competitive benefit to dealing with higher transaction volume, approval rates, and dynamic performance.
Compliance-based Issues
Failure to adhere to compliance norms may happen while dealing with KYC/AML verifications, reporting of suspicious and unusual financial activities, and setting up of security standards for payment cards. Compliance failures in the fintech domain exceed $14 million on an annual basis. Licensing requirements and regulatory measures may not be satisfied by relevant authorities, and compliance audits may not consistently work. The best option to manage this risk is to build automation for reporting and analytics tools. It should be treated as an operational function that determines the structural shift in the payments infrastructure.
Cross-border Complexities
When it comes to cross-border transactions, the highest recorded risk corresponds to the currency conversion options. Foreign exchange could pose a challenge in this fintech operations category, with the addition of major regulatory variations specific to each country. Settlement delays and lack of speed could affect businesses that rely on borderless transactions. An ideal method to overcome this complexity is the adoption of compliance screening without disturbing the multi-currency payment infrastructure. Partnering with global banking models and elite fintech bodies could be a boon for businesses facing issues in this scenario.
Integration Troubles
One of the operational challenges that could create issues is the dependence on legacy rails. Here, the integrations may not work as expected by the transaction models. Similarly, providers may face trouble related to the setting of API standards. It could be inconsistent and might affect the scalability of the payments solution. Companies can overcome this challenge with standardized APIs, robust system architecture, and reliable launch of payment performance functions.
Risk & Identity Factors
Identity fraud is prevalent in fintech environments, with criminals using stolen personal information and false positives. Rules may not be enforced and strictly followed at all times, paving the way for large fraud alert triggers. The risk flagging in this niche could create issues for organizations in terms of sales loss and support cost burden. Devices such as multi-factor authentication, continuous fraud detection and prevention, and biometric approvals can help companies to improve the security of risk assessment and identification. Of these, MFA can reduce fraud risks by up to 99%.
Conclusion
Organizations that address payment failures, compliance issues, and routing problems can take charge of the fintech expansion opportunities and solidify their position in the market. The key here is to adopt a reliable and fast-paced model that does not compromise on consistency. This year’s Money20/20 event will be the right platform for businesses to resolve the problems and inefficiencies in the category. Paywint is looking forward to partnering with operators and businesses in the fintech ecosystem who need support in overcoming these payment challenges.