Why the future of payments is frictionless and invisible
Cash is no longer king in a digital world where the experience is more important than the transaction. The arrival of a global pandemic caused many to reevaluate their usage of physical tender as they embarked on a journey of contactless and mobile payments. Once again, audiences have sacrificed traditional methods in exchange for contactless convenience as omnichannel purchasing became the norm.
A report by Gartner provided businesses with a timely reminder of why they need to transform their payment processes to build organizational resiliency. Both retailers and merchants quickly adapted to a new world of contactless payments, but where do we go from here? And what digital payment trends can we expect to see in the months ahead?
Time is our most valuable non-renewable resource, and many would argue it's the new currency. A few years ago, a survey revealed that 87% of consumers would abandon their carts when faced with a long or cumbersome checkout process. Amazon famously simplified online shopping with its one-click checkouts. Over 74 million shoppers in the US pay $119 a year, not for a product but for convenience and to save time.
With Amazon Go, the online behemoth is now planning on using its shopping technology to skip lines and checkouts to grab and go.
Welcome to the world of frictionless payments. The first seamless experience for a consumer will quickly become the future expectation for every future transaction. Shoppers are already beginning to avoid traditional retail friction points such as waiting in long lines and entering their PIN on a heavily used keypad to complete a purchase.
Uber is another example of a company that has enjoyed great success by making the payment process invisible. But this is just the beginning, and frictionless payments have already entered the mainstream. For example, thanks to IoT technology, car parks can scan our license plates and automatically charge our accounts. Restaurants and bars are also increasingly using in-app pay services that enable users to place their orders without leaving their seats.
These trends will continue to expand throughout every industry as online, and offline the payment process slowly fades into the background. For retailers, these new expectations should fuel investment into technology that will help reduce abandoned shopping carts online, improve efficiency at in-store checkouts and increase customer satisfaction in the process.
Mobile payments are rapidly becoming the payment method of choice for both consumers and businesses. When working from home at scale last year, there was a 72% increase in remote and mobile banking. According to a recent report, 54% of all business-to-business payments in 2020 were completed using mobile banking services. Whether in the office or a shopping mall, we are increasingly leaving our physical cards and cash at home as we continue to manage everything from our smartphones.
Mobile-point-of-sale (mPOS) technology is also creating opportunities for early adopting businesses who are daring to think beyond their brick-and-mortar location.
The flexibility of mPos enables staff to break out of fixed checkout areas to serve their customers in almost any location. As the world begins to open back up, quick thinking retail teams can increase their revenue with mobile services in concert arenas and trade shows, and take services directly to their customers.
Everything from buying a train ticket to grabbing a drink from a vending machine is increasingly completed by mobile payments. As Gen Z begins to reshape the workplace and the world of retail, we can expect mobile payments to continue to go from strength to strength.
Over the last 12 months, we have seen mainstream adoption of contactless and mobile payments, along with a thirst for quicker and frictionless payment solutions. But the Achilles' heel of digital payments is security. Remembering letters 3, 5, and 7 of cumbersome passwords is understandably not a big hit with consumers and a big reason biometric authentication is looking like an attractive alternative.
Many already unlock their smartphone and complete payment using facial recognition or by using their fingerprint. In China, they have removed the device from the payment process to pay for food using just facial recognition. But I will let you decide whether this drifts too far into creepy territory.
Smart speaker payments
When was the last time you purchased something by speaking to a digital assistant such as Alexa? Despite the hype, voice shopping without a screen is struggling to win the hearts and wallets of customers. Although voice is guilty of adding friction when shopping, voice commerce could play a role in how you manage your home finances.
Capital One customers can already check their balance, track their spending, or pay a bill with a single voice command. More and more digital banking applications are beginning to provide similar functions as they jump on the voice payment bandwagon. Paying an invoice using your voice while cooking your dinner certainly removes a friction point, but only time will tell if these new services are ready for mainstream adoption.
With an increasing hype around the tokenization of payments, future payment trends point to DeFi as it continues to experience exponential growth.
As regulators struggle to keep up with the pace of technological change, we can expect a turbulent road ahead. But, if DeFi can grow beyond basic applications, it has the potential to transform the financial world.
The FinTech revolution and the battle to redefine the payment experience is just getting started. Slow-moving traditional banks and card networks are accused of not adapting quickly enough to the changing financial landscape. Amazon Go, Uber, and Deliveroo have already set future expectations for a world of invisible payments. As this becomes our standard expectation for other experiences, the future of digital payments is destined to be frictionless and invisible as we seamlessly pay with our smartphone, watch, face, or voice.
Your email address will not be published. Required fields are marked