Invisible payments are gaining more notoriety in the pandemic era. Amazon Go showed us what is possible, but what does the future hold?
Invisible payments are still a thing of the future — though the pandemic may prove to be the driving force that brings them to fruition sooner rather than later. With invisible payments, transactions become as frictionless as possible, removing the physical elements of payment (e.g. cash, payment cards, wearables, etc.) and adding speed and convenience. Amazon Go garnered some press for its initial take on invisible payments where partially-automated stores enabled customers to simply grab their items and go, sans checkout. Meanwhile, their device can process the payment automatically and behind the scenes.
Why Invisible Payments Matter
Consumers have always sought frictionless payment experiences, though the pandemic has yielded a more dramatic shift in sentiment toward any payment experience that is fast and contactless. Ecommerce sites continue to streamline checkout experiences, and merchants are improving omnichannel experiences as customers choose to use mobile order ahead and pick up in-store during lockdowns and restricted retail experiences.
Meeting consumer preferences and providing a streamlined, frictionless, and invisible payments experience will continue to be invaluable for payments providers, banks, merchants, and other financial institutions. In fact, Juniper Research predicts that invisible payments will account for $78 billion in annual transactions by 2022. While consumers are certainly interested, the back-end mechanics of invisible payments are complex and will require payments companies to overcome some barriers before widespread adoption can occur.
Not Everyone is Ready for Invisible Payments…
While invisible payments sound desirable, the truth is that many people still rely on cash. The use of cash may have undergone some volatile spikes and drops at the beginning of the pandemic; however, experts say that it is holding steady within the payment ecosystem. Specific segments — like the underbanked and the elderly — continue to rely on cash despite the emergence of new technologies and payment methods. Even B2B and P2P payments are holding onto cash transactions. The key will be to roll out invisible payments just like other payment methods: slowly and while offering alternative options for those who are not quite ready to make the switch.
Regulators are also keeping a close eye on the evolution of payment methods, especially as the need to secure sensitive cardholder data and guard against fraud becomes a top priority in the digital channel. In Europe, there are specific conditions under the second Payment Services Directive (PSD2) regarding Strong Customer Authentication (SCA), requiring customers to verify identity before exchanging payment information between financial institutions and third-party providers. In simple terms, fraud prevention complicates invisible payments as authentication often requires input from the consumer, such as using biometric data (like a fingerprint) or entering a PIN.
…But Some Are Gearing Up
BBVA recently announced its own invisible payments initiative based on biometric technologies that can transform the in-store checkout experience into an invisible one. It does so via an app that enables users to do things like reserve a table at their local restaurant, dine, and then simply leave. All it takes is one wave at the waiter, who can confirm the reservation in the system. From there, the bill for the meal is automatically registered in the user’s account.
A system like this is certain to transform the in-store customer experience by removing the payment experience practically entirely. In a similar vein, users can use the app to select items they’d like to purchase from Sodexo cafeterias at BBVA headquarters. Those items are prepared for pick-up so the customer can easily pick up the items without waiting in line. Users can even set certain items as “favorite orders” that can easily be ordered again in the future. Once the customer picks up the order, payment happens behind the scenes with the card that the user set up in the app beforehand. It represents the transformation from one-click payments to zero-click payments.
The way people pay is a little bit in flux right now and merchants, financial institutions, payment providers, and consumers all adapt to the unsteady landscape of life during the coronavirus. Still, invisible payment methods will continue to be developed and tested with an end goal of improving customer experiences, especially for everyday purchases. It may be some time before we see true and complete invisible payment journeys as there are still many significant obstacles to be overcome.