This editorial was first published in our Online Payments and Ecommerce Market Guide launched on 1 November 2017. The guide features several important thought leadership editorials from ecommerce and payments industry professionals, which makes it a top-reference source for anyone involved in the payments ecosystem.
In the last five years we have witnessed a revolution in payments, transforming both how consumers make purchases, and the opportunities available to retailers. Consumers and businesses alike have a myriad of options when it comes to making payments – from wearables and biometrics to all manner of mobile app payments, the choices are staggering.
However, with new payment innovations come various challenges. From too much choice to not knowing what investment to back wisely, the options often seem endless. It is, therefore, not surprising that retailers often suffer from a payment paralysis.
Overcoming challenges with new payment methods
The adoption of new payment methods has a direct impact on revenue, helping retailers retain existing customers and attract new ones. What is more, the cost of implementation is significantly decreasing with many systems no longer reliant on a new Point of Sale or back-end legacy systems, making for much smoother and quicker implementations. Customers are also beginning to see new ways of paying as a real game changer when choosing retailers.
The good news for retailers is that new payment technologies are constantly being brought to the market, so there are multiple ways to take advantage of the latest innovations. Among these, there are a few key trends that are gaining a lot of traction in the global market worth noting.
1. Mobile wallets. One of the most well-recognized payment innovations worldwide, mobile wallets are the first step in bringing together payment, receipt and loyalty services under a single function with additional benefits, particularly when it comes to ticketing-based products. Juniper Research predicts that wallet use will rise 32% to USD 1.35 trillion globally, whereas contactless alternative payment transactions are expected to grow by over 400% in the UK in the next 10 years, according to UK alternative payment metrics 2016 & 2026 chart from eMarketer.
2. Social payments and chatbots. The influence of social media on retail cannot be underestimated. From its ability to find new customers using lookalike targeting to providing new customer service and communication channels, social media is a vital battleground for retailers. Mastercard is developing bots for both merchant and bank partners including Mastercard Chatbot Developer Platform, and in the US, the recently launched Masterpass-enabled bot via Facebook Messenger that will encourage customers to order through the messenger platform for a frictionless shopping experience.
3. Artificial intelligence and biometrics. Artificial Intelligence or AI is not just built into a single payments product. It is already a component of some of the innovations we have seen so far. It is present in Social Payments where AI technologies ‘learn’ about consumers so product suggestions can be as accurate a possible. In April 2017, Mastercard unveiled the next generation biometric card, combining chip technology with fingerprints to verify the cardholder’s identity for in-store purchases. It follows the launch of Identity Check Mobile in 2016, a payment technology application that uses biometrics like fingerprints or facial recognition to verify a cardholder’s identity, simplifying online shopping and making payments even more secure.
Adopting new technologies
Mastercard Impact of Innovation Study, conducted in September 2016, surveyed 23,000 consumers across 23 countries in Europe, the Middle East and Africa to get a sense of how quickly new payment technologies were being adopted and by which customer types.
The study found that only a third of consumers worldwide are adopting or are close to adopting digital payments, but this number is growing all the time. Trends are being driven largely by developing nations with the exception of a handful of Scandinavian and Eastern European countries. Western Europe will continue to be the slowest to adapt, having a high-functioning, standardised payments infrastructure in place.
Globally, most ‘new’ payment innovations are still in their infancy when it comes to rates of adoption. The current mobile payments market will be worth an estimated USD 283 billion by 2021, and it is clear that there is huge scope across the board for retailers to invest in payment technologies and be part of the ‘payment revolution’. Adoption is and will continue to gather speed and, as we have seen, the market changes fast and differs from nation to nation. It is critical to get ahead of the game and start to invest now to ensure that retailers are one step ahead of the competition.
Retailers are also, understandably, concerned about the security around managing huge volumes of customer data, and the financial security of new, non-traditional platforms. Partnering with a trusted solutions provider with security at the forefront of their business is, therefore, vital to ensure a smooth and seamless transition. There are clearly an overwhelming amount of payments innovations being developed, but they are not a one size-fitsall for every businesses. Some will be better suited and more desirable to one business over another.
At Mastercard Payment Gateway Services, we ensure that retailers select and implement what is practical and desirable for their business. Deep knowledge and understanding of customer base enables us to help retailers make an informed decision and ensure that new payments innovations significantly add value to the business.
About Raghav Prasad
In May 2017 Raghav Prasad took on the role of President of Mastercard Payment Gateway Services. With more than 25 years of financial services experience at RBS and Citibank, and having previously held senior roles for Worldpay and Mastercard in the MEA region, today he is responsible for the strategic direction and global end-to-end management of the business.
About Mastercard Payment Gateway Services
Mastercard Payment Gateway Services offers industry leading, global payment processing and fraud management technology for merchants, partners and acquirers. Our unique white label capability enables acquirers and technology partners to rebrand and resell our payment gateway. Facilitating a variety of payment methods across multiple channels internationally, our solution allows our customers to meet their business objectives with confidence.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now