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Five payment trends that decide the future of payments – Part 2

Capgemini
2019-05-28

In the first part of this blog series, we introduced the developments that are currently happening within the payments market. We addressed the first (of five) payment propositions, Payment-as-a-Service. In this second blog post, we will elaborate on the changing payment industry, highlighting two payment propositions that are on the rise as a result of growing customer demands.

Payments: What are customers’ essential demands?

With our constantly evolving digital world, today’s marketplace is everywhere and available at all times. This has a major impact on the way we behave as consumers, as we move towards online marketplaces. The rising popularity of online shopping has strong implications for the payments industry. What is important to understand is that payments play a crucial role in seamless customer experience. Unlike the actual shopping experience, no one wants to invest their time on complicated checkout procedures. Therefore, it is not surprising that customers’ most essential demand is that payments be smooth, fast, and secure.

The biggest challenge that online businesses currently face is shopping cart abandonment. The current checkout process is still often a bumpy ride for consumers, as checkout procedures are too complicated, take too much time, or do not offer the desired payment method. So, in the light of these challenges, retailers are striving to make the payment procedure as seamless as possible, to a point where it almost disappears.

We see two payment trends becoming more and more popular to drive checkout procedures to the background. In this blog, we will take a closer look at the evolving trend of one-click payments and invisible payments.

Trend II: One-click payment

One trend that has been around for some time and has been patented by Amazon is Amazons’ one-click payment. Amazon responded quickly to the growing customer demands by offering a frictionless payment solution where consumers can check out with a single click. The big advantage of one-click payments is that it eliminates the issue of shopping cart abandonment and is an interesting payment method to simplify recurring payments for consumers while getting their permission to withdraw funds directly from their account.

In 2017 Amazon’s patent for one-click payments expired, offering other retailers the opportunity to capitalize on this quick and frictionless payment method. It seems that Amazon has set the new standard for the market as many retail businesses are adopting the technological features of one-click payments.

So, how does one-click payments work exactly? Consumers share their billing and shipping details once when establishing an account. Once the data is shared, with the consent of the consumer, payment details for future recurring payments are stored via a cloud-based solution, allowing the consumer to check out with a single click.

However, the emphasis on providing fast and seamless payment experiences puts increasing pressure on businesses to ensure a secure environment and minimize fraud. As online payment solution technologies are evolving, robust fraud protection solutions must follow. Businesses are now further exploring the possibilities of advanced AI and machine learning technologies to quickly identify suspicious patterns. In combination with advanced human intelligence to perform experienced risk assessments, retailers are striving to offer a fast and smooth payment solution while guaranteeing a secured payment environment.

Trend III: Invisible payments:

Another major trend to ensure a seamless payment experience are “invisible payments”. Driven by strongly automated processing, the internet of things, and improved securities (e.g., biometrics and cryptography), companies are striving to drive payment processes completely to the background and render them invisible.

Payment solutions are changing from a transactional orientation towards a more customer-oriented focus. Invisible payment capabilities ensure that customers no longer have to worry about cash or card payments. A virtual cloud-based wallet makes the check-out procedure completely invisible. Companies such as Uber, Amazon, and Barclays are using “just-walk-out technologies” to smoothen the payment process. So, how exactly does this work? This rule-based technology uses beacons and computer vision to detect when items are removed from shelves. It then automatically processes the payment without the need for users to swipe, authenticate, or remember a password. A good example to explain the technological features of invisible payments can be found in the automotive industry, where new models of Jaguar are adopting built-in touchscreen technology that can be used with an associated app to seamlessly pay for fuel. The combination of geo-location and cloud-based payment technology offer the experience of a checkout-free .

There is no doubt that invisible payments provide a solution to make payments as easy and seamless as possible. But the questions that should be raised here are whether consumers are convinced about these new technologies and whether they are willing to adopt to this new approach to payment services? For many consumers, the risk of fraud and security breaches remains a critical barrier in their willingness to adopt to new payment technologies. So, in order to capitalize on the huge potential of invisible payment methods, it is important to win their trust. As long as consumers perceive payment methods as too risky, they will not adopt them, regardless of how seamless and convenient they may be.

Currently, invisible payments are still in an immature state of development. However, considering its immense potential and evolving technological solutions, invisible payments are set to find increased application across many industries, whether it be in banking, retail, or automotive. However, a major challenge remains in winning over consumers’ trust.

So, what lies ahead of us?

The shift from a transactional focus towards a more customer-oriented approach will continue to spur innovations in the payments industry. As e-commerce becomes increasingly popular, companies strive to find payment solutions that meet customer demands online, as well as offline. A renewed focus on customer centricity will increasingly move payment procedures to the background.

In our next blog post, we will shed light on cross-border payments and spread payments, highlighting two payment propositions that are on the rise due to globalization and reducing the risks of payment transactions.

Co-Author for the blog – Bas Smeijers.