Fintech-as-a-service (FaaS) solutions have enabled small enterprises to deploy solutions, facilitating their payment processes and expanding their product reach globally without the burden of developing an in-house, proprietary payment gateway.
Joel Tay, CEO of Soft Space Sdn Bhd, believes that with FaaS, businesses are able to adopt digital payments while helping financial institutions better understand and address their customers’ needs to operate safely in a highly vulnerable and fraudulent environment.
Soft Space is an FaaS start-up established in 2012. It offers merchants and consumers a range of solutions, including contactless payment through mobile devices as well as comprehensive white label e-wallet services.
Before FaaS became popular, most small business owners were unable to collect digital payments due to the size of their operations, says Tay. FaaS payment processing services have enabled companies to accept and process payments quickly and securely.
FaaS payment processing solutions are often integrated into existing workflows, which can improve the efficiency of payment processing and reduce the risk of errors.
“When we started in 2012, financial technology (fintech) was not as popular as it is today. We were operating as a technology provider operating within the means of a traditional financial framework and regulations. At the time, not many regulations were flexible enough to accommodate innovations,” says Tay.
Nearly a decade ago, navigating regulatory hurdles posed significant challenges for fintech firms. However, in October 2016, Bank Negara Malaysia implemented a regulatory sandbox. This initiative was designed to create a conducive regulatory environment for the adoption of fintech, fostering innovation across the Malaysian financial sector.
“When we moved closer to 2015 and 2016, fintech became popular and more recognition and regulations were introduced. People also wanted to innovate and banks wanted to be seen as being at the forefront of cutting-edge technology,” says Chris Leong, Soft Space’s chief strategy officer.
Soft Space is one of the first companies in Asia to receive Europay, Mastercard and Visa (EMV) certification from EMVCo, which facilitates worldwide interoperability and acceptance of secure payment transactions. As an FaaS provider, it was one of the first to migrate to chip-and-PIN technology too.
A chip-and-PIN card terminal is now typically used in restaurants and retail spaces. It is a type of credit card terminal that requires the cardholder to authorise the transaction by entering their PIN, or personal identification number, much as they would with a debit card. These card terminals are less susceptible to fraud than previous generations of credit cards.
“Somehow, the pandemic inadvertently accelerated the need for contactless payments. Whether it was through online shopping or food delivery applications, contactless payments were making a big wave,” says Leong.
Fintech providers, including those offering FaaS services, are required to adhere to the Payment Card Industry (PCI) guidelines. In 2018, Soft Space received the Software-based PIN entry on Commercial off-the-shelf devices (SPoC) certification to commence operations safely.
“There is good and bad. We have always battled with regulations in different countries because there are many uncertified fintech providers. A lot of [fraudsters] coming into the space as well. Sometimes [regulations] encourage the growth of the ecosystem and sometimes it gives us a bad name, especially when expanding into other countries,” he notes.
Hence, when the PCI SPoC was introduced by the Payment Card Industry Security Standards Council in 2018, Soft Space eagerly adopted the new standard, which ensures transaction authentication through software-based PIN verification on smartphones and tablets.
Now all vendors are required to employ PCI-approved PCI PIN Transaction Security-compliant hardware for PIN authentication.
Nonetheless, with the advent of PCI Mobile Payments on Commercial off-the-shelf (MPoC), merchants can also leverage the near-field communication capabilities of readily available smartphones and tablets to authenticate transactions securely.
source : https://theedgemalaysia.com/node/710952