Voice of the Industry

Digital payments: a strategic evolution in the context of globalization

Thursday 15 October 2020 08:13 CET | Editor: Anda Kania | Voice of the industry

Andréa Toucinho outlines the key takeaways from the white paper ‘Dématérialisation du paiement et évolutions du parcours d’achat: quelles perspectives?’

The evolution from ‘traditional’ payments to digital tools is one of the major topics in the payments industry. The study ‘Dématérialisation du paiement et évolutions du parcours d’achat: quelles perspectives?’ conducted in the French payments market reminds us that the creation of the era of digital payments is not a recent process – it is first linked with payments cards. In addition to this technological evolution, there is a strong institutional ambition – European institutions aim at developing electronic payments for various reasons, and on top of all, to address security concerns.

An institutional strategy

The move towards electronic means of payment represents for European institutions, above all, a security guarantee. Thus, digital payments can be easily scored and controlled, whereas ‘traditional’ payments, like cash payments, are a strongly private use. In addition to this reality, many studies realised by payments actors show that ‘traditional’ means of payments are more vulnerable regarding security. For example, the French ‘Observatoire de la Sécurité des Moyens de Paiement’ showed in its 2019 report a growth of fraud in check payments.

Furthermore, at a European level, AML fourth Directive considers cash as a risky mean of payments. For this reason, many European institutions see digital as a strong asset for security. This move is represented by the evolution to SEPA means of payment and the creation of instant payments.

Digital inclusion

Nevertheless, some questions and conditions have to be considered in the market. First, the necessity to foster information and communication about these new tools for consumers. Digital inclusion is a strong condition to ensure the transition towards a real cashless society. That’s why payments professionals have to study not only regulatory, technological, and strategic conditions, but also the sociological and economic realities. Thus, in many regions of the world, like in Europe or Africa, there are strong differences among countries regarding uses and digital strategies. Hence, it is necessary to develop a strong analysis of the reality of societies before adopting a strategy on digital means of payment.

The consent to pay: a key feeling

Another consideration is the necessity to evolve towards a more efficient experience of payments with strong attention on the responsibility and the consent of consumers to pay. This idea is strongly defended by consumers’ associations. The idea is that the consent to pay is a key feeling to guarantee the responsibility of consumers and a better money management.

For this reason, ‘invisible’ payments are not seen as a good process: payments professionals prefer the idea of frictionless payments. Frictionless payment is also linked with another reality: the payment’s place in the retail process. Whereas yesterday, payment was at the end of the transaction in store, tomorrow, the payment will be realised through different ways, in various moments of the customer experience, according to omnichannel strategies linked with new uses, especially in the context of mobility. This last consideration reinforces another key idea: the evolution towards digital payments has to be studied by all actors of the market, according to a ‘co-innovation’ model. In this new paradigm strongly linked with new consumption codes, consumers have a strong role to play, mainly thanks to the ‘Millennial’ segments. 
Millennials: a new step for digital uses 

 

In fact, the arrival of Millennials in the market of payments and consumption is seen as a new step for innovation. This generation is natively mobile and very linked with social media. Therefore, it is obvious that it will bring new means of consumption, like the importance of data, or even the relation between social media and payments, easily represented nowadays by the strategy of WeChatPay. Millennials will accelerate the move of society to digital uses and reinforce the idea that payments are today linked with a global approach. Thus, the use of Uber, Amazon, and other global actors testifies to the idea that digital payments have to be considered by payments companies not as a national strategy, but as a real global movement. Hence the importance of universal payments and interoperability, like the solutions developed by nexo, for instance. As a result, digital payments have to be analysed, today, as a real asset of globalisation. 

This article was published in our Payment Methods Report 2020, an extensive overview of what’s new in how people pay in the most relevant ecommerce markets.

About Andréa Toucinho

European expert in payments and financial services, Andréa Toucinho is Director of Studies, Prospective and Training of Partelya Consulting and Country Ambassador for France of European Women Payments Network (EWPN). France Representative of national fintech associations of Spain and Portugal (Aefi Spain and Afip Portugal), she realised two books about payments in 2018 and 2019 and is one of the co-authors of the international PAYTech Book published in January 2020 by Wiley.

 


About Partelya Consulting

Created in 2008, Partelya Consulting is a French consulting company specialised in means of payment. It works with all actors of the market, from banks to schemes and retailers, on technological and strategic issues. The company works at an international level (France, Europe, Morocco etc.) and it is a member of the French Association du Paiement.

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Keywords: Andréa Toucinho, digital payments, omnichannel, customer experience, regulation
Categories: Payments & Commerce | Payments General
Countries: Europe
This article is part of category

Payments & Commerce