Imagine a time when your face, voice or hand will be all you need to make a purchase. Science fiction or fact?
According to Tony Craddock, director-general of the Emerging Payments Association (EPA), the payment process will effectively disappear for consumers in the future. Technology will create a completely seamless payment process that could literally “change the world”. And, according to Craddock, UK regulators are taking a refreshing approach that makes this country a ‘hot spot’ for payments innovation.
This rapid transition will pose both opportunities and challenges for UK ecommerce businesses, so we’ve done a little star-gazing.
We would really like to talk with you about the opportunities new payment solutions could offer your business.
What's on the horizon
Moving from cash to card and online transactions is still in progress, but the world of payment solutions is moving ahead – fast.
In the booming financial technology or ‘fintech’ market the mantra is ‘anytime, anywhere, any device’ payment.
With 2.6 billion smartphone users expected worldwide by 2018, mobile and contactless technologies will be at the core of the growing use of mobile payments or m-payment. Some forecasts predict that m-payment will grow by 210% in 2016.
The take off of Apple Pay in the UK has been tentative since its launch in July last year but Apple is upbeat and is already looking to expand the service in Europe and Asia. Tapping a finger on your phone in place of a credit card and a PIN is likely to shape customer expectations in the future.
Person-to-person (P2P) payment is already a big growth area. This makes it really easy to move money from your personal account or card to someone else’s using the internet or mobile phone. Venmo, for example, reported that more than $1 billion payments were made through their app in January this year alone.
So, it’s unsurprising that P2P has drawn the attention of giants like Facebook, which has already made it possible to exchange payments through Messenger. Apple and Google are expected to join in.
Round the clock, almost instantaneous payment, known as real-time payment, is also proving popular with customers and businesses alike. Although there are national systems around the world, real time is not yet a global phenomenon. When a new real-time cross-border service does emerge it is likely to change the domestic and international banking landscape.
Blockchain is also starting to feature – the technology underpinning the bitcoin digital currency. The blockchain ledger is distributed across a network that records every bitcoin transaction. Claimed to be ‘tamper-proof’, it is now emerging as a way for companies to make and verify transactions on a network instantaneously without a central authority.
Opportunities for business
Already, more than 40 top financial institutions and a growing number of businesses across industry sectors are experimenting with blockchain style distributed ledger technology. It can provide a secure and transparent way to digitally track the ownership of assets. It could speed up transactions and cut costs whilst lowering the risk of fraud.
Reducing layers of administration involved in national and global payment processes could lift a huge burden for ecommerce businesses and reduce costs too.
With these enabling technologies, customers will find it easier to buy using new secure features on their personal mobile devices. Face, voice and fingerprint recognition embedded in mobile phones, for example, are already accessible. This, combined with real time transactions would support increased sales and improve cash flow. In principle, refunds should be just as easy.
With new payment technologies effectively enabling global transactions, and currency requirements being automatically managed and administered, everyone’s marketplace could become worldwide.
Challenges for business
Existing P2P services in the Cloud have already recognised the need to invest in enhanced data protection for their customers.
To overcome this, sensitive information could be automatically encrypted by securing the transaction with the buyer’s own hardware using more robust versions of existing bio-technologies. This could effectively eliminate the potential for it to be hacked. Mastercard, for example, started experimenting with face recognition technology last year, but there’s still a long way to go.
Currently, P2P transactions can only take place when participants are on the same platform. An open solution isn’t yet on offer. It would allow users to accept payment from anyone. This would mean payments could be exchanged between strangers – without requiring them to share personal information with you or a third party.
We are sure there’s much more innovation to come and that this is the beginning of a new era for ecommerce.
Get in touch if you would like to discuss how new payment solutions could change your business.