Innovation, expansion, digitalisation – 2018 payments retrospective

We expect transactions to be quick and around the clock – that is why change and innovation are constant when it comes to technology in the online and mobile payments space. As we look back on what happened over the past 12 months, we notice that they were packed with big announcements. Thus, since the trends from 2018 have a great impact on how the payments landscape will be shaped in the year ahead, allow us to guide you through some of the year’s most important trends and news in the online and mobile payments space.

Alipay and WeChat Pay expanding worldwide

Chinese consumers are using their mobile devices to pay for almost everything they need. Thus, the expansion of digital wallets such as WeChat Pay and Alipay has made it possible for Chinese consumers to use their smartphones instead of their physical wallets or even their formal bank accounts.

Besides offering almost complete coverage of online and offline shops in China, Alipay also offers a wide range of other financial services, such as travel booking, money market investments, insurance, and even loans, whereas WeChat Pay is widely integrated in social media hosted by WeChat, and can provide targeted marketing options for merchants.

In 2018, the opportunity of millions of Eastern tourists visiting Western countries was seized, and throughout the year, we witnessed a trend growing stronger, while Alipay and WeChat Pay expanded worldwide. Mobile payments have become more popular in China`s rural areas as well, according to a report by People`s Bank of China (PBOC). Moreover, a survey regarding the payment behaviour of Chinese tourists showed that, when travelling, they prefer to use mobile payment methods with which they are familiar. Accordingly, Alipay moved even further in 2018 by arranging global partnerships with companies such as Motion Pay in Canada, FreedomPay in North America, and Openpay in Mexico. The mobile payment method was also implemented in Europe by MCM and in the Middle East at the airport in Doha. Moreover, both WeChat Pay and Alipay were integrated by retailer chain 7-Eleven, by Air Canada for online bookings, and by CANCAN and WorldFirst across Europe.

The two digital wallets moved beyond payments in 2018, providing users with an entire ecosystem through which they can pay and get paid, communicate, borrow, invest, and manage their financial lives from a single place.

The ‘pays’ are here to stay

The possibilities that digital wallets bring are appealing for several reasons: they are easy to integrate on multiple devices, they are intuitive for customers, most of them can be used across channels, and they open the door for loyalty and marketing programmes.

While Chinese consumers are enthusiastic about using mobile payment options wherever they shop, we cannot say the same about consumers in different countries around the globe. This is understandable if we take into consideration the fact that the simple gesture of reaching for your phone instead of your wallet when making payments is not an automatic reflex. However, digital wallets became more and more popular in 2018, and Apple Pay, Samsung Pay and Google Pay advanced considerably – this was definitely their year.

The latest consumer spending data from Worldpay shows that the ‘pays’ dominate more than half of worldwide supermarket transactions, with 59% of all in-store supermarket mobile transactions being made via digital wallets such as Apple Pay, Google Pay and Samsung Pay. Confidence with mobile payments is also growing as shoppers start to purchase higher value goods via their smartphones, with the growing number (65%) of Generation Z contributing to the increasing popularity of digital wallets.

What is more, a recent study found that Apple Pay has an estimated 127 million active global users, while new data from Auriemma Consulting Group shows that 77% of digital wallet transactions are made via Apple Pay. In 2018, Apple launched its digital wallet in several new countries amongst which Germany, Spain, Norway, Taiwan, Poland, Ireland, Australia, and Italy. According to reports from April 2018, Google Pay has reached 100 million installs in the face of just a few months, and throughout the year, it expanded its global presence as well, launching in countries such as Japan, Croatia, the Nordics, UAE, Chile, France, and Germany. Following the launches in the US, Russia and Singapore from 2017, in 2018 Samsung Pay went live in UAE, South Africa, Australia, Italy, and Mexico as well. Therefore, the ‘pays’ have created plenty of buzz.

Focus on different payment needs of verticals

Payment options for unattended retail

As a thriving segment of the economy that offers huge growth opportunities for cashless payments, the unattended retail is forecasted by ResearchAndMarkets.com to reach USD 34 billion by 2023. It comes to life through methods such as city parking meters and vending machines, which nowadays not only sell food and drinks, but offer electronics, makeup items, school supplies or medicines as well. This form of retail has the potential to offer almost any non-perishable consumer good, and it is growing in popularity. Customers prefer to use self-service kiosks over transactions based on human contact, while – as Simon Rushforth of Featurespace depicts when analysing the contactless payments adoption status – more and more payment transactions are made via a contactless card or device. For more insights into the consumers’ attitude towards payments at unattended terminals, you can check the interview with Mark Colllins, TNS.

Moreover, consumers demand to use cashless and mobile payments for everyday purchases; thus, credit, debit and contactless payment options have started to be implemented in order to provide the highest level of security available to any POS, and companies like Ingenico Group provide self-service solutions.

Mobile apps everywhere

Mobile grocery checkout: in January 2018, Amazon opened the first ‘automated’ grocery store called Amazon Go, which relies on cameras and weight sensors to recognise what shoppers take off the shelves and what they put back. There are no cash registers nor any checkout lines, and customers need to download the Amazon Go app in order to shop in this store.

Mobile assistance at the gas pump: in August 2018, Shell and General Motors have announced that Shell-branded stations across the US have started accepting the first embedded, in-dash fuel payment. The technology allows drivers of eligible vehicles to initiate in-vehicle payments and to activate a specific pump and start fuelling. The amount due is automatically charged to the customer’s payment method of choice.

Therefore, in 2018, from grocery stores to gas stations, with the use of smartphone technology, we could notice a major upgrade when it comes to the utility of mobile apps.

Payment needs in the travel industry

The travel industry is spending USD 74.5 billion annually to manage payments, and dealing with all aspects of payments from multiple providers is seen as the biggest pain point. Similar to what we encounter in other industries, the solutions specific to the travelling sector require competitive and transparent acquiring fees. However, they also need to be secure and capable of automatically managing peaks whenever demand suddenly increases.

In 2018 we have seen many companies joining forces in order to provide the travel industry with new opportunities regarding payment optimisation. Out of the partnerships that caught our eye this year, we mention the ones between Wirecard and the Australian Federation of Travel Agents, the European travel group Ávoris and the payment platform startup Easy Payment Gateway, Ixaris and Visa, and the one between Sabre and Visa. When it comes to the travel industry, Jean-Christophe Lacour – from Amadeus’s payments business – shared with us the payments preferences and developments that shape this industry. Moreover, in our Payments and Commerce Market Guide 2018-2019 renowned experts in travel payments have shared their expertise, providing us with a better view on the payments needs of this complex industry.

Introducing IBM Blockchain World Wire

New technologies and innovation shaped 2018, offering new opportunities for consumers, ensuring frictionless shopping and payment experiences. In August, IBM has launched IBM Blockchain World Wire, an innovative near-instant cross-border payments system, in partnership with blockchain company Stellar. By using the blockchain technology and the Stellar protocol, which is a key part of the technical framework for near instant cross-border payments, World Wire is now able to deliver faster payment processing, leading the way towards streamlined payments.

Major acquisitions

If we’re looking at the mergers and acquisitions from the online and mobile payments space in 2018, we notice two main strategies: scale (geographical expansion, consolidation) and capabilities.

Companies aim to expand into new markets, where new opportunities await, or to establish a global presence (Ingenico and Paymark, Paysafe and iPayment). In terms of capabilities, there are different motivations behind these acquisitions, since companies wish to speed up innovation to meet customer demand, enter new market segments, strengthen digital innovation initiatives, develop new products, enhance the overall product suite, expand the range of services, or strengthen technology capabilities. Some of the companies engaged in this type of process in 2018 are First Data and BluePay, TSYS and Cayan, or Finastra and Olfa Soft. However, certain acquisitions have as a main purpose innovation (NMI and Creditcall, PayPal and iZettle) or adaptation to different verticals (PayPal and Simility, Flywire and OnPlan Holdings, NCR and JetPay).

More information about the major mergers and acquisitions of 2018 can be found in our Payments and Commerce Market Guide 2018-2019.

2018 at The Paypers

This year, we have launched the ninth edition of our Payments and Commerce Market Guide 2018-2019 and the third edition of our Payment Methods Report – Innovations in the Way We Pay, for which we had contributions from experts who shared their insights regarding the online and mobile payments space.

Last but not least, we would like to thank you all for reading our editorial pieces and we hope that you will continue to follow us on social media and read our insights in the upcoming year!

A blissful new year from The Paypers!

About Raluca Constantinescu

Raluca is a Content Editor at The Paypers, specialising in online payments, digital wallets, PSPs, mobile payments, omnichannel commerce, online retail and cross-border transactions. She holds a Bachelor’s Degree in Foreign Languages and Literatures and has a wide background in editing and publishing.