April 6, 2023

5 Ways to Balance Regulations with Customer Expectations

Explore five best practices for payment providers to effectively meet their regulatory requirements and the expectations of modern consumers.

# Insights

Across the globe privacy has become an increasingly important practice for global payment providers. Whether your organisation is an enterprise or a startup, the increased prevalence and sophistication of cyberattacks, acceleration of modern privacy regulations, and evolving customer demands for privacy are difficult to balance.

Consumers expect businesses to protect their sensitive data. In fact, a recent McKinsey survey found that 71% of users decided to take their business elsewhere if they had concerns about a company’s handling of data privacy. Businesses delivering safe and secure onboarding experiences can build customer trust, ultimately fostering better customer experiences, higher acceptance rates and greater lifetime values. With the global digital payments market expected to reach USD 19.89 trillion by 2026, it’s more imperative than ever for payment providers to deliver seamless and secure customer onboarding experiences. While it can be difficult to balance the need for security, compliance, and customer experience, there are steps you can take to ensure your business effectively meets its regulatory requirements and the expectations of modern consumers.

In this blog, we’ll outline five best practices to help you deliver the highest level of security and protection while placing the customer experience at the core.

Prioritise supply chain due diligence

Consumers expect their data to be handled securely during the identity verification process and are increasingly taking their business to where their personal information is best cared for. Data security is essential for payment providers, yet many organisations overlook how it is implemented across their supply chain. A data breach within your supply chain can cause severe damage to your business and customers.

Identity verification solution providers vary significantly in how they handle and store personally identifiable information. To reduce your exposure to regulatory, financial and reputational risks, assess whether your solution provider ensures data minimisation. Consumers provide their personal data for the fulfilment of onboarding or verification processes. Once that purpose is fulfilled, the data should be deleted or anonymised – ensuring that the customers’ privacy is exposed to as little risk as possible. Payment providers must do their due diligence to ensure they adhere to the highest level of data protection and can safeguard personal data.

Minimise onboarding friction

The onboarding process sets the tone for the customer relationship and has a lasting impact on revenue. In an ideal world, onboarding would be swift with little to no friction. Unfortunately, this is not always the case. In reality, many customers find onboarding to be overly complex, tedious or time-consuming, ultimately leading them to drop off.

The more time-consuming and complex an onboarding process appears, the higher risk of drop-off. This can have a detrimental impact on revenue. In fact, for many businesses, the loss of a customer can often be more costly than fraud itself. While onboarding verification is essential to meet your regulatory requirements, many organisations fail to go beyond outdated “check the box” processes that can lead to poor customer experiences. A modern identity solution can offer various tools and services to reduce friction and streamline onboarding. Optimising the onboarding process can mitigate the risk of fraud, reduce the impact of failed verifications and minimise customer drop-off – allowing you to confidently verify your customer’s identity while delivering frictionless online interactions.

Leverage real-time verification

Whether your customers are opening an account or applying for a service, you need to be able to easily onboard and quickly verify them. Payment providers will benefit from using an identity solution provider with access to multiple authoritative data sources or verification methods to verify customers quickly and reduce the need for manual reviews.

Authoritative and reliable data sources help to reduce false positives and improve accuracy while providing a seamless user experience. Advanced technologies such as machine learning, biometrics, and artificial intelligence can also be used to verify the identity of customers in real-time, without the need for physical documentation or manual checks, which significantly reduces the time taken to onboard customers. By leveraging government-issued IDs, credit bureaus, and biometric data, payment providers can ensure that they have a robust and reliable system in place for verifying their customers' identities.

Don’t rely on manual processes

Practices such as Know Your Customer (KYC) and other fraud prevention tools allow payment providers to protect themselves by verifying the customers they are choosing to engage. Previously, organisations have relied on legacy solutions and manual processes to verify customers. A modern identity solution can help streamline onboarding by automating the verification process. This eliminates the need for manual reviews, minimises the chance of human error and reduces the associated costs of training and maintaining a team.

Automation during onboarding involves using technology to speed up and simplify the verification process. This can include using software to automatically scan and verify documents, such as IDs or passports, and using algorithms to analyse customer data and identify potential risks. Customers no longer need to provide physical copies of documents or spend time answering repetitive questions. Instead, the verification process can be completed quickly and efficiently, allowing customers to begin using your service or product without delay. In addition, automation can improve the accuracy and reliability of the verification process, reducing the risk of errors or fraud. This helps your business to comply with regulations and protect yourself from legal and financial risks.

Learn to recognise compliance washing

The recent wave of data breaches has seen some of the world's largest companies make headlines for all the wrong reasons. The personal data of millions of individuals was compromised; ensuring security and compliance is a crucial consideration for consumers when choosing with whom to conduct business. Payment providers can meet regulatory requirements and protect customers by learning to recognise compliance washing.

Compliance washing is a term used to describe the practice of companies making false or exaggerated claims about their privacy and security standards to gain an advantage in the market. This can include making claims about compliance with industry standards and regulations or exaggerating the effectiveness of security measures which can significantly impact both consumers and businesses. Companies may engage in compliance washing to appear more trustworthy and secure, even if their practices do not meet the standards they claim to uphold. As a result, payment providers may be misled into believing that their identity verification services are more secure and private than they actually are. By partnering with a solution provider that is certified and adheres to the world's highest industry standards and regulations, you can build trust with your customers and demonstrate your commitment to protecting their privacy.

As privacy becomes increasingly important for global payment providers, it is essential to balance your regulatory requirements and customer experience. To find this balance, payment providers should prioritise supply chain due diligence, minimise onboarding friction, leverage real-time verification, avoid relying on manual processes, and be wary of compliance washing. By following these best practices, payment providers can ensure data protection, reduce the risk of fraud, and build customer trust, leading to better user experiences, higher acceptance rates, and greater lifetime values. Furthermore, as the digital payments market continues to grow, delivering secure and seamless customer onboarding experiences is more critical than ever.

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