The good and the bad

With the good comes the bad, unfortunately.

The COVID-19 pandemic, the quarantine protocols, and the fear being felt by many about going out of their homes has made the desired digital transformation and adoption faster.

According to PayPal officials, online transactions are up 20 percent year-over-year, with branded transactions increasing by over 43 percent, or more than double the pre-COVID levels in January and February.

Phoram Mehta, chief infosec officer for PayPal’s Asia Pacific region, and Guru Bhat, VP for omni channel and customer success, met with members of media in a virtual media briefing last Thursday to discuss trends and threats that have emerged as a result of digital transactions amidst the new normal and the growing importance of cyber hygiene to keep digital transactions secure.

PayPal, a global leader in digital payments, has been processing around 33.8 million transactions per day and $22,577 payments every second. As of end-2019, it had a total of 305 million active accounts with a total payment of $712 billion. Last May 1, officials revealed that the company had its largest day of transactions in its history, even larger than last year’s transactions on Black Friday or Cyber Monday.

A report from statista.com showed that in the first quarter of 2020, PayPal’s net payment volume in the first quarter of 2020 reached $190.57 billion, representing a 19 percent growth year-on-year. This payment volume was generated through the over 3.26 billion transactions it processed during that period.

The same report revealed that PayPal ranks third behind credit and debit cards and ahead of all other payment methods. In the United States, it is one of the most popular payment methods, accounting for 22 percent of online transactions.

The PayPal officials noted that the shift from offline to online has seen a pivotal growth in the Asia-Pacific region, with growth being driven by several factors, including high internet and smartphone penetration rates, globalization, increased consumer affluence, and improved logistics infrastructure.

COVID-19, they pointed out, has further accelerated the adoption of e-commerce. But while Japan and the Philippines’ internet economies have continued to grow, they noted that it still faces challenges, including consumer distrust and preference for cash-based transactions.

Fortunately, there is a major push by both governments to promote cashless payments, they said.

But with many people preferring to purchase what they need online and to make cashless payments for fear that going out of their homes to buy and handling bills and coins would increase their risk of getting infected, there are those who are also taking advantage of this new way of doing things.

Cyber fraud has been on the rise with new and more sophisticated types of fraud fast evolving. Aside from phishing which involves gathering personal information using deceptive e-mails and websites and by masquerading as a trustworthy entity, PayPal officials emphasized that there are now other types of nefarious attacks like smishing (which is short for SMS phishing which involves tricking a user into downloading a virus or malware onto his mobile device), synthetic identity theft where cyber criminals or hackers combine stolen personal data with fabricated information to create a new identity, cloud jacking, vehicle attacks, to name a few.

PayPal cited a Google Transparency Report dated March 2020 which showed that there has been a 350 percent increase in the number of phishing sites from January to March this year. The number of COVID fake websites increased from 1,600 to 39,000 in the first 16 weeks of the pandemic while 33 percent more ransomware payments were made by businesses in the first quarter, the company added.

Officials revealed that it is no longer a question of whether or not one gets attacked, but when will one be attacked.

They said that spikes in attempted cyber attacks have been recorded during seasons or occasions like Singles Day, Christmas, and most recently, COVID-19.

Cybersecurity, they stressed, continues to be among the leading concerns for businesses in the region. Philippines and Japan companies, they reported, both list cyber incidents as third in their list of top 10 business risks.

With this, they pointed out that Asia-Pacific companies are expected to invest more in security-related hardware, software and services. Unfortunately, small and medium businesses encounter higher risks due to lack of budgets and expertise.

They said that while cybersecurity has increased in priority and organizations have apportioned larger budgets towards prevention, detection and response capabilities to cyber threat are still at a nascent stage.

PayPal officials emphasized that a collaborative effort is needed to advance digitization, from regulators requiring strong cyber hygiene to industry investing in innovation to develop a trusted online e-commerce ecosystem – to ensure sustainable economic growth.

With e-commerce growing exponentially in the region, they said that there is an increasing need for secure digital payments.

Fortunately, companies like PayPal are investing a lot in technology. According to PayPal, more than just being a payments company, they are a trust company, with people counting on them to manager their most valuable asset.

Just recently, PayPal launched a new QR code payment functionality, which it said is a quick and safe way to complete an in-person transaction using a PayPal wallet, while limiting physical contact and eliminating the need to handle cash. For example, customers who are selling items in-person at a local coffee shop can print a QR code, place it on their table and have consumers simply scan, enter the amount they are paying and send money immediately. The feature could also be used in shops that have no card machine, or by takeaway delivery drivers or tradespeople who typically rely on cash payments. The QR feature is available in 28 markets worldwide and countries like the US, Hongkong, Germany and hopefully will soon be available in the Philippines.

Bhat meanwhile said that they are looking at boosting security at every level and end-to-end, from the app to the network. However, as more bad actors try to take advantage of increasing digital adoption and rising e-commerce, he reminded customers to be more aware about security and to get educated in what takes for their transactions to be secure.

For instance, while using strong passwords, consisting of upper and lowercase letters, numbers and symbols may help, PayPal advises its customers that using biometrics like Touch ID, Face ID or Fingerprint Manager to log in to its apps is one of the best actions one can take to keeping their account secure.

Then there is the so-called multi-factor authentication, a security system that verifies a user’s identity by requiring multiple credentials. Like when you log into your online banking app using a password and then the app sends a one-time password to your mobile phone which you will have to input into your account to verify your identity and to allow the transaction to proceed.

PayPal has been leveraging artificial intelligence (AI) and machine learning (ML) technologies in areas like risk marketing and customer service as it continues to push the boundaries in the payments market. An article in analyticsindiamag.com explained that PayPal also runs one of the most massive hybrid-cloud environments in the world and hosts multiple technologies in each layer and function (around 2700 applications running over 20,000 servers with 238 pentabytes of storage).

The same article revealed that PayPal has now turned to more advanced AI tech like deep learning, active learning, and transfer learning, thus continually achieving 10-20 percent more accuracy over other traditional ML approaches in real-time fraud detection.

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