The double-edged swords of AI and groundbreaking GPU power need to be kept under the protective sheath of heightened cybersecurity vigilance
The payments landscape in the Asia Pacific region (APAC) is undergoing rapid and unprecedented evolution.
This is exemplified by the presence of four countries (Thailand, South Korea, India, Malaysia) being among the top 10 for real-time payment transactions globally.
Additionally, digital payments have emerged as the predominant mode of payment for e-commerce transactions in the APAC region.
Payments landscape overview
Before the COVID-19 pandemic of 2020, e-wallets and QR payments were in their early stages of development in many countries, with new options continually being introduced.
However, the outbreak of the pandemic necessitated a shift towards digital payments as the primary mode of transaction to curb the spread of the SARS COV-2 virus. This sudden change then accelerated the adoption of digital payments significantly. Since then, other instruments and trends have evolved, such as:
- Digital wallets: This mode of payment has emerged as the preferred payment method for e-commerce transactions in the region, accounting for about 70% of the total e-commerce transaction value. Credit and debit cards follow behind at 18%.
- Infrastructure enhancements: The advancement of real-time, cross-border, and e-commerce infrastructure has been instrumental in driving the expansion of digital payments. Significant progress can be seen in the regional integration of national real-time payment networks, such as Singapore’s PayNow, India’s UPI, Thailand’s PromptPay, Malaysia’s Duitnow, and Indonesia’s QRIS. Additionally, global initiatives like Project Nexus by the Bank for International Settlements (BIS) are working towards enabling instant cross-border payments worldwide.
- Central Bank Digital Currencies (CBDCs): These currencies and their pilot testing have the goal of enhancing interbank settlements and improving the efficiency of financial transactions. Singapore and China are currently taking the lead in their development.
- Quick short-term credit: : The availability of Buy Now Pay Later schemes has empowered consumers with access to short-term credit, accounting for around 4% of the online spend in the region, equivalent to a total payment volume of US$120bn.
Players in the payment industry are staying ahead of the curve by developing seamless and secure payment solutions that cater to the unique demands of digital businesses worldwide. As we look towards future trends, the entertainment industry emerges as a captivating focal point, driven by the influential presence of industry tech giants at the forefront of shaping the evolving landscapes of Virtual Reality (VR) and Augmented Reality (AR).
The ongoing innovation in VR and AR technologies holds immense potential to unlock new avenues for e-commerce and gaming platforms. By leveraging these immersive technologies, businesses can introduce ground-breaking methods to engage and interact with their audience on a deeper level. This heightened level of engagement not only enhances the user experience but also opens up possibilities for the integration of innovative payment solutions within these virtual environments.
Protecting growth opportunities with security
While technology has spurred the growth of payment options, so too has it facilitated the grow of digital fraud.
Additionally, cyberattacks are becoming more sophisticated, with threats now involving multiple layers of attack. For instance, a single attack may include social engineering, DDoS, malware, and ransomware simultaneously.
Furthermore, the rapid advancement of evermore powerful GPUs has accelerated the pace of hacking, making unauthorized access quicker and more efficient. To put this into perspective, a password comprising eight characters, including numbers, uppercase and lowercase letters, and symbols, can be brute-forced by a hacker within a short time frame of just five minutes.
Also, one of the most common security vulnerabilities stems from internal sources. Employees inadvertently clicking on phishing websites containing malware can easily compromise the security of an organization. This highlights the critical importance of robust cybersecurity measures and continuous employee training to mitigate the risks posed by internal security breaches.
In my opinion, financial institutions must prioritize security to stay ahead of cyber threats by, for example, being PCI DSS Level 1 certified and 3DS2 compliant, and undergoing rigorous internal security audits. Regular penetration tests by external vendors will also ensure system integrity.
Also, leveraging AI is also an appropriate and timely way to combat AI-enhanced cybercrime. The technology is being integrated into transaction monitoring, anti-money-laundering measures, and Know-Your-Customer software to prevent fraudulent transactions.
By analyzing data and identifying patterns, AI can flag suspicious transactions proactively. Real-time fraud detection through AI offers a proactive approach compared to reactive methods currently in place.
