Ensuring trust in electronic payment media

Päivi Heikkinen, Head of Division and Timo Iivarinen, Economist, Oversight of Market Infrastructures, Financial Stability and Statistics Department, Bank of Finland

Abstract
The currently dominant payment instruments do not meet the requirements of new technological environments such as the internet or mobile. Recognising the importance of efficient and safe electronic payments such as card payments, internet payments or e-banking, it is important that public trust in these payment instruments is retained. There is a lack of consistent data on electronic payments fraud, but already the reported losses are huge. This article highlights the difference between the direct, indirect and social costs of payment fraud and calls for a more holistic approach to security in payment instrument design. The payment industry has done a lot, but it should do even better and make use of customer-specific parameters and take a stronger role in the whole payment processing chain.

Keywords
electronic payments, payment fraud

Päivi Heikkinen is the Head of Division for the Oversight of Market Infrastructure in the Bank of Finland Financial Stability and Statistics department. She has over 20 years’ experience in various areas of universal banking and development of banking applications and financial market infrastructure, including card and internet banking services. In 2004, she joined the Finnish Financial Supervision Authority (FIN-FSA) before moving to the Bank of Finland. She has also worked in Frankfurt in the European Central Bank on market integration questions (2009–2010). She has been a member in several Eurosystem working groups.

Timo Iivarinen has been active in the field of payments for two decades. For the first ten years, he worked at a Finnish commercial bank as assistant vice president in the Foreign Payments department with duties in the payment processing and customer help desk area. After moving to the central bank, he has been working as an economist at the Bank of Finland in the Financial Stability and Statistics department in the Oversight of Market Infrastructure Division. He specialises in payment system policy and oversight-related matters in the retail payments system area.

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