Digital payments experiences are evolving at a lightning-fast pace. What will these experiences look like in 2020?
It’s undeniable that digital is driving significant changes to how consumers shop and pay. Consumer patterns and behaviors have been upended as ecommerce and mcommerce continue to grow. Electronic payments — aided by retail giants like Amazon, Apple, Alibaba and others — have evolved, spurred innovative solutions, and have altered the payments ecosystem.
Digital payments totaled more than $961 billion this year. Total digital transaction value is projected to have a CAGR of 8.6% from 2019 to 2023, resulting in more than $1.33 trillion in transactions by 2023. This growth and continued momentum in digital payments has many asking “what’s in store for 2020?”
We are in an era where contextual commerce rules. Retailers can no longer view commerce channels as separate entities, but must consider both digital and physical as two elements on the same journey: a purchase. The traditional “boundaries” of brick and mortar and digital storefronts are crashing down as consumers seek ways to simply shop how and when they want, how they want. That often includes crossover between channels.
Conversational commerce will play a big role in this, where payments can be initiated by chatbots or voice technology or on social networks. Garnter predicts that chatbots will power the majority (85%) of customer service interactions by next year. Consumers have grown increasingly comfortable with using chatbots and voice assistants to navigate products and services and make payments. Both machine learning and natural language processing will aid in the proliferation of these technologies within payments, particularly voice commerce. As biometric technologies like voice recognition improve, authentication and security will improve and facilitate more transactions on this channel.
It may begin to feel like we’re living within a science fiction movie as formerly “faraway” technologies become more commonplace. Already, biometrics and the Internet of Things (IoT) have had significant implications for the payments space that continue to unfold and evolve, making payments nearly invisible.
Speaking of invisible, invisible light communication may be one way that digital payment information is transmitted via light waves to connected devices. This would enable consumers to purchase products on, say, an electronic billboard, by simply aiming their smartphone camera at the board. Using a mobile app, consumers could complete a transaction that is authenticated by a PIN or biometric marker.
This type of technology makes shopping as easy as taking a picture. Rather than waiting in the traditional line to check out at a brick and mortar store, consumers would be able to scan their items using a connected camera (smartphone, smartwatch, etc.), and then pay via a mobile wallet or through an in-store payment terminal. The receipt for the purchase could be easily sent to the user’s mobile device.
Another interesting area within the digital payments realm is transportation. Paid parking lots will move away from ticketing and queues and move toward more seamless solutions. Drivers can link bank details and car registration to transportation accounts, enabling smart plate recognition technology to do the heavy lifting. Like the Amazon Go of parking, users would simply have parking charges automatically debited from their account as they exit the lot.
Another seamless experience can be facilitated by Google Assistant. Commuters can both book parking spots or public transport tickets using the virtual assistant, which then contacts and connects with relevant services (e.g. SpotHero). The billing goes through Google Pay on the user’s smartphone, simplifying the entire experience.
Digital payments are the way of the future. While this is hardly news to anyone in the payments space, the how is still in flux. Digital payments technologies — and consumer behaviors and preferences — continue to morph. Essentially, we are likely to see the removal of human intervention from most payments and banking methods, enabling consumers to seamlessly checkout and pay with minimal security. The key will be to balance these frictionless experiences with top notch security that retains ease-of-use for authenticated consumers...but not fraudsters.