Overcoming Challenges of E-Payment

Digitisation is aiding every industry in one way or the other in daily online transactions. The onset of e-payment has helped all businesses increase revenue and efficiency when comes to collection of payments. With the latest cybersecurity threats, it has also posed certain concerns which we will cover some feasible solutions for such threats in this article.

Let’s start by taking a look at the various types of e-payments :-

Types of E-Payment

Bank / Credit Card

Most consumers find it convenient to use their credit or debit cards to purchase products or services they need routinely. This process is really fast and simple as all required is to provide the credit card details to perform a transaction. Utilisation of CVN (card verification number) has made credit card transactions more secured.

Smart Card

Smart cards, or commonly known as ‘reload cards’, are cards with a microprocessor (i.e. chip) which contains the necessary data of the cardholder. These cards can be pre-loaded with funds prior to making any online payments and funds shall be deducted immediately. The greatest advantage of this type of card is it offers controlled spending.


Another preferred choice among e-payment services are via e-wallets. These are prepaid accounts which can store different bank accounts, credit cards or debit cards information in a secured environment which facilitates payments in a quicker and secured manner.

Know the Significance of E-Wallet

Internet Banking

Internet banking, the pioneer in e-payment, has seen tremendous progression in the past decades. Internet banking is deemed a necessity in this modern age and era as one can easily pay for any products or services with the money available in a bank account. Debit or credit cards are not required for payments made via internet banking, and all required is just the bank ID and password.

Mobile Payment

Mobile payment is one of the fastest e-payment system to date as all that is required is to download the software/application in the mobile phone, connect it with the credit card of choice for making payments. Setting up is simple and need to only register once and every payment shall be followed by a text message notification after the transaction is made. Though fast and hassle-free, this payment process is the most vulnerable to security risks.

Major Challenges in E-Payments & Prospective Solutions

  1. Fraud and Chargebacks

New technologies like EMV and fingerprint recognition are also being employed by PSPs to lower fraud and chargebacks. Progressive EMV technology is used to validate that a payment card is real and assist with the authorisation to approve and complete a transaction. Biometric identification, like fingerprint recognition, is now being implemented to raise mobile payment security and avoid fraudulence. Via the mobile payment method, the buyer just scans their fingerprint with a compatible mobile device, to ascertain the buyer’s identity prior to payment is made. This is a potent tool for fraud prevention, as it makes sure the person conducting the transaction is completely authorised to do so.

  1. Cross-Border Transactions

New developments are emerging to form cross-border payment needs:-

  • Rising transnational systems will lower reliance on correspondent networks
  • Government-led initiatives and mandates will start to regulate payments and fees
  • Payment systems will handle credit risk, liquidity, and costs more impactfully
  • Multinationals will attain economies of scale, with an additional perk of consolidating credit threats
  • Outsourcing will raise processing efficiency and decrease costs
  1. Card Data Security

CI DSS standards requires merchants and processors to match 12 parameters across 6 security arenas:-

  • Develop and keep a safe network and systems
  • Safeguard cardholder data
  • Keep a vulnerability management program
  • Execute robust access control policies
  • Routinely monitor and test networks
  • Keep an information security measure
  1. Multi-Currency and Payment Techniques

Global e-commerce means accepting different types of payment methods and currencies from all over the world. Electronic payments like e-wallets, mobile payments, and credit/debit cards aid online merchants involved in international markets by allowing their customers to pay in their local currencies. For merchants accepting multi-currency, cross-border transactions, all that is required is to register new bank accounts, new business entities, and follow the respective regulatory hurdles in each national market that they are established in. Merchants that subscribes to this can simply collect payment in one / local currency and receive the credited amount in the merchant account in its native currency.

Labuan e-Payment

The Labuan Financial Services Authority Act 1996 (LFSAA) and the Labuan Business Activity Tax Act 1990 (LBATA) are two major sets of laws which regulate the financial activities in Labuan, including the ones regarding the online payments. The Labuan Financial Services Authority (LFSA) issues the needed approval to validate that license owners’ e-payment system is safe and secured for online payments.

Conditions for e-Payment Approval

  • the applicant needs to offer information about the payment providers, payment instruments and merchant account;
  • the security system for online payments needs to be provided at the time of license application;
  • the operator of the payment system will have to provide a license; and
  • all applications must be submitted to the Labuan FSA for approval.

Read about: Measures to Acquire a Labuan e- wallet License

Please feel free to get in touch with our QX Trust team of consultants at +60 3 9212 6940 or consultant@qx-trust.com for more comprehensive information on how to obtain an e-payment approval / license in Labuan.