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Compared to NFC, QR Code is a much cost-effective and viable option. Most retailers have barcode scanning hardware. It’s integrated with their POS for billing of products. So there is no need for extra hardware.Let’s assume small businesses do not have scanners. Even then buyers can make QR Code payments.

How Do QR Code Payments Work? Businesses have options on how they wish to process QR Code payments based on their scale of business.

1.Buyer-to-Large Retailer Transactions

This system of QR Code payment applies to large retailers such as supermarkets. Let’s assume they have barcode scanners at every POS. This is how it works:

• Let’s say a buyer picks up items worth $400 at Walmart and goes to the cashier for checkout
• The cashier scans each item and generates a bill of $400. He generates a unique QR Code on a screen near the POS
• Buyer opens the payments app on his/her smartphone, scans the QR Code, and authorizes the payment
• The cashier gets a notification that buyer has made the payment and prints the sale receipt

2.Buyer-to-Small Business Transactions

This mode of QR Code payments applies to small businesses and retail outlets. Let’s assume they do not have barcode scanners at POS.This is how the process works:

• Buyer picks up items worth $12 at a small store
• The cashier requests buyer to make a payment and points at a printed QR Code near the POS
• Buyer opens the payments app, scans the QR Code, enters the amount, and authorizes the payment
• The cashier gets confirmation via SMS

Note that in this case, the buyer enters the amount and the merchant has a permanent QR Code. This QR Code helps the buyer app to identify the merchant account.

3.Peer-to-Peer Transactions

This mode of QR Code payment applies when an individual needs to pay another. For example, friends, family members, or self-employed professionals.This is how it works:

• Marsha got some plumbing work done from Ross, the plumber and she now owes him $50
• Ross opens the payments app and generates a QR Code worth $50
• Marsha opens her payments app and scans this QR Code on Ross’s phone to allow the transfer
• The transfer is complete and both Ross and Marsha receive an SMS confirmation

Conclusion: For businesses of all sizes, small or large, QR Code payments is the easiest way to go cashless. It is far more inclusive than NFC-payments and much more affordable. Also, QR code based payment provides convenience as well as enhanced security, preventing users from identity theft or loss of critical information.

References:

https://tpay.com/en/mobile/qr-payment

http://www.businesscardsqrcode.com/qr-payments.html

http://www.bpay.com.au/Business/Large-Business/BPAY-Services/QR-codes.aspx

The evolution of technology-driven fraud solutions, such as predictive analytics, may enable companies to rethink their position on the unavoidability of fraud losses. Advancements in technology continue to drive fraud detection costs down, while simultaneously increasing efficiency. Businesses can now generate strong ROI on fraud detection.

The latest evolution of anti-fraud solutions empowers the fraud investigator to drive operational efficiency and lower labor costs in the continuous fight to tackle fraud. These solutions enable the fraud investigator to do the following:

1. Better detect incidents of potential fraud by using more accurate rules to improve fraud detection precision and reduce the likelihood of false positives. This eliminates wasteful time investigating non-fraudulent incidents
2. Prioritize the focus of investigations by using a risk-based approach so fraud investigators can first review potentially fraudulent transactions that have the highest risk or nominal value. This optimizes the allocation and usage of resources
3. Improve decision making and assessment of fraud through an easy to view and centralized environment, as well as reducing manual tasks to gather, analyze and review information. This increases the efficiency and effectiveness of the investigators

Organizations can generate a much higher return on investment by implementing an anti-fraud solution that not only reduces time and costs, but makes better use of limited resources. Investing in a solution that helps to secure and protect an organization’s assets in a way that demonstrates clear ROI will be welcomed by executives and financial officers.

Compliance officers can also help their business make smarter decisions by providing accurate information and actionable insights to combat fraud and protect their valuable assets. This cost effective fraud solution not only helps companies reduce their fraud loss and its associated risks, but also make informative business decisions and grow their bottom line.

Source: https://www.forbes.com/sites/riskmap/2016/11/16/combatting-fraud/#2d84ec7223d8

There is no denying that FinTech has caused a new shift within the financial sector. What traditional financial firms now must do is to figure out how to deal with this new entrant and what direction traditional firms must go in order to continue serving within the financial sector. In the article, “Fintech should improve as well as disrupt” by Co-Founder of VentureFounders, James Codling, he explains the role of fintech and how traditional firms can help push fintech towards success.

The main topic that surrounds this article is the explanation on how fintech is not necessarily taking over the financial industry, but rather enhancing and improving the traditional financial institutions that are already here. With the combination of advanced technology, traditional institutions can improve its quality of work as well as effectively and efficiently serve clients. Fintech also benefits from this relationship by using the resources and reach of traditional institutions. Coming into the market, fintech has proved to become a disruptive technology, changing the platform of what financial institutions have to offer. Overall, the benefits that come with supporting one another outweigh the outcome of trying to dominate the market.

http://www.altfi.com/article/2791_fintech_should_improve_not_disrupt

IBM has proposed blockchain technology to solve Wal-Mart’s issues with identifying and containing food safety outbreaks. The proposed technology will allow Wal-Mart to track products in their supply chain from the farms and factories of their suppliers to the shelves in their stores. Currently, their supply chain management can takes weeks to identify and remove products that are infected with bacteria such as salmonella. The lengthy process significantly impairs Wal-Mart’s ability to protect their customers resulting in damages their brand image.

Not only does IBM’s proposed blockchain technology benefit grocery retailers such as Wal-Mart, but it also has the potential to benefit international shipping. IBM pitched their technology to Maersk, a global shipping giant, as a method to decrease the cost of maintaining the paperwork required to import and export goods. Processing the paperwork for the shipment of goods usually includes around thirty people between customs, tax officials, and health authorities. A distributed ledger technology can help to expedite the process reducing their paperwork costs that currently equals the cost of shipping the physical containers. The blockchain can also reduce fraudulent tampering with bill of lading documents reducing the frequency of stolen or counterfeit goods.

Resource: https://www.nytimes.com/2017/03/04/business/dealbook/blockchain-ibm-bitcoin.html

The mobile payment system and a future where physical currency is no longer needed will eventually come. However quick this future may come, it still has a lot of hurls to clear before it can be widely accepted. While the majority of the world is embracing the use of near field communication (NFC) technology, some area’s in the world have embraced it less so and has kept on using long existing payment options like debt cards, credit cards, and physical cash. While this is not that big of a deal, it deals more harm than good. If there is not a strong push in these areas of the world (looking at you America), then the adoption rate and the advancement of technology in this field will be slow. For example, there has been a big push within all industries to adopt cloud based technologies. While it is great to see the industry moving forward, the resistance to change long standing methods reduces the potential of these new technologies. Only with the increase in demand of cashless and cardless payment methods can we advance the current state of financial payment methods to the next level.

Reference:

https://www.forbes.com/sites/techonomy/2014/01/23/cash-is-trash-the-future-of-mobile-payment/2/#5697b22a7d44

Stealing the actual card: This type of fraud involves stealing the victim’s card and using it for unauthorized purposes. Most people are unaware when their card gets stolen and crucial time is lost before the victim realizes that the card is stolen.
Skimming/Counterfeit fraud: This happens when the fraudster creates fake cards by obtaining the details of the magnetic strip or electronic chip from the victim’s card. It happens when we using our cards at POS locations. Extremely difficult to detect and people don’t realize it until they see their bank transactions.
Card not present(CNP): CNP fraud occurs when the fraudster obtains the victim’s card information and uses the card to make transactions which do not require the actual possession of the card, such as online or over the telephone.
Identity theft fraud: in this type of fraud, the fraudster uses the victim’s information to apply for loans and credit cards, withdraw money from the bank and generally use the card for privileges as a legitimate user.

People have been trying to steal money since the time money existed. Fintech is growing rapidly and providing users with opportunities to make financial transactions seamless. However, at the same time, it’s also providing fraudsters new ways of stealing money. The biggest threat I feel for fintech is going to be dealing with fraud. Robust security mechanisms have to be put in place in every step of a transaction, but at the same time, it should not hinder customer experience. After all, fintech is all about providing a seamless experience for customers. Finding the right balance between fraud prevention and customer experience will determine the success of fintech.

References :

http://www.cardwatch.org.uk/types-of-card-fraud.html

 

Companies like Lending Club, an online loan marketplace, and Square, which allows small businesses to accept electronic payments, have been changing the ways Americans expect to receive financial services. These companies have also operated outside of some of the regulatory constraints on traditional banks.

The licenses from the Office of the Comptroller of the Currency, which oversees many national banks, will be available to companies like Square and Lending Club that accept deposits, facilitate electronic payments or lend money.

Many technology firms have been pushing for some sort of new regulatory system that would allow them to cut through the patchwork of state and federal laws that govern financial activities and make it hard to expand nationally.

The introduction of the licenses, called special purpose national bank charters, underscores how quickly so-called fintech firms are growing and how significant they are considered to the future of the financial industry.

“Providing a national charter to those responsible innovators who seek one and meet our high standards can help promote economic growth across the country and recognizes that technology-based products and services are the future of banking and the economy,” Mr. Curry said in a speech at Georgetown University.

In my previous blog, I mentioned that the U.S. government should clarify the law and regulations on fintech industry as soon as possible. This license will help innovative fintech companies to grow with certainty in government regulations and support. Eventually, the growth in the fintch sector will improve the overall economy of the country.

 

 

Source: https://www.nytimes.com/2016/12/02/business/dealbook/technology-start-ups-to-get-a-license-to-bank.html?_r=0

 

This article discusses the potential power that FinTech can provide for the global world. Currently, there are about 2b out of the 7b people in the world who are connected to the new digital economy. This has left people out from partaking in the new economy. These technologies are transforming developing countries such as Kenya that has transformed the countries currency to digital format via M-Pesa. It is a huge feat in a country that is so far behind from the rest of the world in other respects.

According to McKinsey, FinTech will help increase global GDP by 6%. FinTech will utilize new technologies such as Machine Learning to help reduce trivial work such as data inputting that will reduce total costs and allow machines to do a majority of the work.

FinTech is starting to impact the world at large. There will be a lot to be seen in from this space within the next 5 years.

Reference: https://www.forbes.com/sites/oracle/2017/03/14/how-fintech-is-powering-the-global-economy/

I decided that since this is the last blog post, I would do a highlight of what I’ve learned over the course of the last 10 weeks from this class. I have used smaller financial systems before such as Quickbooks, PeopleSoft, and Netsuite, but nothing to the same scale as SAP. What I enjoyed about using SAP in this class was the depth and intensity of data which allowed us to late edit and examine the tables from SAP. Using Celonis us helped me join together skills I learned in OMIS 105 as well as my knowledge of the P2P process that I had to audit during my summer internship. Working et EY performing IT Risk Assessment gave me a nice background before this class, but I believe this class significantly helped solidify my skills as well as understand SAP better. By knowing the intricacies as well as potential of fraud examples in SAP, I will have a jump start if I ever have to audit a financial system like SAP. Thank you again for a wonderful quarter.