Mark Smith, head of payments at AWS, writes in the new PYMNTS e-book, “Beyond the Horizon: How to Identify Unforeseen Threats That Could Impact Your Business,” that technology can help banks and payments companies comply with local data regulations.
Payment transactions are processed by multiple parties, with data being passed to each party to ensure the legitimacy of the transaction and facilitate approval and the flow of funds. Factors ranging from geopolitics to global pandemics to regionality continue to increase the likelihood that countries, government agencies and central banks will place a greater emphasis on localization. As countries enact data localization and local payment data processing regulations, banks and payment companies must find ways to comply with applicable laws and regulations. By leveraging cloud infrastructure and modern data analytics, they can authorize only legitimate transactions, reduce fraud and create a frictionless customer experience.
AWS has helped payment customers in countries like India, Indonesia, and Switzerland keep and process the data they need in-country (in an AWS Region) without having to support their own data centers and staff. This has significantly reduced the time to comply with regulations from years to months. Our payment customers are also using AWS Local Zones and AWS Outposts to provide AWS services they need for data analytics, personalization, credit scoring, fraud prevention, and more in countries where AWS does not yet have a region, but where customers want to keep their data close to their own data centers. AWS launched Amazon Payment Cryptography, a cloud-native payment HSM managed service, in 2023. Our customers are excited to have a PCI-compliant service for card payment encryption in the cloud, without having to maintain dedicated data centers or colocation facilities, reducing overhead and latency. As more payment companies move their core processing to the cloud, the availability of this service allows them to place HSMs where they need them, without the large fixed costs of deploying physical HSMs. We expect that as the service expands to more AWS Regions and more countries implement data processing localization, banks and payments companies will see increasing value from it.
From a fraud prevention perspective, payments companies are expected to turn to evolving machine learning techniques such as federated learning, which allows them to retain data and train models locally while sharing model updates globally to maintain data privacy and security. Organisations are enhancing their federated learning approaches with privacy-enhancing technologies (PETs) in the cloud to enable collaboration while meeting local requirements such as Europe's General Data Protection Regulation (GDPR) and India's Personal Data Protection Bill (PDPB).
As initiatives requiring localized data and payment data processing increase, we see many opportunities to help payment companies comply with these requirements. And a byproduct of leveraging the cloud to comply with these regulations is faster time to market and improved customer experience. The ability to stand up IT resources in the cloud to test ideas and scale successful ideas is one of the biggest drivers of disruption in the payments industry.
Read more: Amazon Web Services, AWS, Beyond the Horizon: How to Identify Unforeseen Threats That Can Impact Your Business, Data Analytics, E-Books, Featured News, News, PYMNTS E-Books, PYMNTS News, Regulation, Technology
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