Future of payments: Don’t miss the technology boat

From currency notes to QR codes, payments have come a long way in the past few decades. You don’t need a crystal ball to predict the future of payments. With technology evolving every day, find out how businesses can give their customers a seamless experience.

Imagine a swan dance – fluid, graceful, seamless. These are some terms that come to mind. Now imagine if purchasing a product or service can be as smooth – just glide in, pick what you want, and glide out. The entire process of scanning and paying for the product happens in the background, without any extra effort from you. This is what the future looks like, for payments.

Changing Demands, Changing Solutions

With every new generation, preferences and trends change. And with the new generation of shoppers, the Generation Z, being born into a digital world, technology is, and will continue to be an integral part of payments. Paying easily and fast is crucial to completing a purchase. A customer is likely to abandon the purchase if the payment process is slow, or too complex, or doesn’t offer preferred payment methods. A frictionless transaction is not a novelty anymore – it is the norm.

What started many, many centuries ago as barter system has now evolved to a point where it is a string of digital characters. What are some trends that are now dominant in the payments industry?

  • Mobile banking and wallets: Mobile payments are ruling the roost currently, with shoppers becoming increasingly aware of the convenience of e-wallets and QR codes.
  • Connected payments: Watches no longer conjure images of a vintage Heuer passed on from generation to generation. Wearables are now commonly used to make payments. The next big splash is just around the corner with smart fashion. Wearables will take on an entirely new dimension with smart clothes and smart accessories. With ultra-slim batteries integrated into them, customers can just plan their purchases and pay using smart wearables.
  • ‘Just Walk Out’ purchasing: Almost 40% of this customer base would like to see “just walk out” purchasing implemented in stores soon. This method uses deep learning technology, allows a customer to scan his phone on arrival, choose products, and walk out of the store. The customer is then charged using the relevant app on his phone.
  • Virtual Reality: While not completely new, VR is in its nascent stages in the retail industry. It will be a common occurrence for customers to “visit” the mall from the comfort of their couches at home. With VR technology, the entire experience of visiting the mall, choosing and purchasing the item, and paying for it, will be complete without leaving the house.
  • Artificial Intelligence: While chatbots are already gaining popularity, over the next few years, AI will become a norm in the world of payments – with voice, facial recognition and biometric identification making the checkout process more secure and faster than ever. With a well-designed and “trained” neural network, conversion rates will be higher – with fraud reduced and legitimate customer transactions not being declined. Staying updated with artificial intelligence technologies will be a key differentiator in the next 3-5 years.

The Future Of Payments Is Autonomous

Increasingly, payments are slinking away into the background – becoming invisible – and no longer tedious and time-consuming. Payments are becoming “autonomous,” which means that paying for products or services will blend into the experience seamlessly without extra effort from the customer. So, what does autonomous payments mean?

  1. Authentication = Payments: Walk into a store and biometric scanning (fingerprints or facial recognition) will authenticate you and authorize your purchase. And as with the Internet of Things, everything is connected, which means that with your approval, your bank account information is tied to your biometric data. You pay for your purchase without any extra effort.
  2. Invisible or ‘Zero-Click’ Payments: What follows will be payments becoming invisible – i.e. you don’t stand in a queue at the cash counter, you don’t take out your credit card, you don’t need someone to swipe your products and give you a receipt. Everything happens seamlessly and without any friction, i.e. Zero-Click. This will be an integral part of the omnichannel shopping experience.
  3. Rewards will truly be rewarding: Currently, loyalty programs and reward systems work more in favour of merchants, than the customer. Going forward, these rewards will be more intuitive and personalized to a customer’s preferences and spending habits.

Making Payments Autonomous: Things To Consider

The move to autonomous payments cannot be at the cost of the customer’s privacy or experience. What are some things that merchants need to consider in this next wave of payments evolution?

  • Customer privacy is non-negotiable: Facial, voice and biometric recognition make frictionless payments a reality. But does this create a risk in the short-term? The importance of security cannot be stressed enough, and progress cannot come at the cost of security. For a customer to trust that things are going to plan without security concerns, rules need to be in place. This is a challenge that merchants need to address currently. With PSD2 regulations, Strong Customer Authentication (authentication with at least two of three factors – what you know, what you have, and what you are) will be mandatory. To be PCI-DSS compliant while using SCA, the two mechanisms will have to be independent of each other, i.e. if a hacker gets access to one factor, it doesn’t automatically grant access to the second.
  • Customer Experience: Autonomous checkout – walk in, pick up, leave – is no longer a distant dream. Whether it is at retail outlets, or on e-commerce platforms, seamless checkouts and zero click payments are the need of the hour. Merchants have a wide range of options to enable this – ranging from overhead camera installations to having Artificial Intelligence driven robotic shopping carts.
  • Is your solution scalable and flexible? Providing autonomous checkout cannot come at the expense of scalability. If a retail chain needs to lock its doors for several weeks to roll out new technology, or if the solution isn’t cost effective, then the benefit is lost. So, expensive shelf-weight sensors might not be for all businesses. Particularly, in case of large retail chains, businesses need to find cost-effective solutions for seamless checkout. Expensive technology such as shelf weight sensors  take away from flexibility – what happens when items need to be moved to a different section during a flash sale? Or, customers remove products from shelves and place them elsewhere while shopping? Stores will need to use technology that offers some degree of flexibility for autonomous checkouts.

The stage is set for payments to seamlessly blend into the end-to-end experience, making it as customer-friendly as possible. As with anything, taking those first steps might be challenging for merchants. But having technology on your side will be one of the integral parts of your payment strategy when preparing for the future.

SafeCharge Limited is an Electronic Money Institution authorised and regulated by the Central Bank of Cyprus and is a principal member of Mastercard, Visa and Unionpay International (CUP). SafeCharge Financial Services Limited is authorised and regulated by the Financial Conduct Authority as a Payment Institution. Both SafeCharge companies are wholly owned by SafeCharge International Group Limited.