Decoding the future of retail payments

Our everyday life has become so heavily influenced by technology, that the way we used to carry out basic activities is becoming obsolete. Paying is slowly, but surely becoming one of them. We’re now looking towards a future where the payments experience will be everywhere and unseen at the same time. What’s driving this payments transformation? 

Everything starts with today’s modern consumers. Millennials and Gen Z will have a spending power of USD 1.4 trillion and USD 44 billion respectively by 2020. This automatically makes them the main factor shaping any shopping and payments experience.

Since they’re used to everything digital, both these consumer groups have the highest expectations when it comes to any kind of interaction with brands. Essentially, they have an ‘anytime, anywhere’ mentality; they expect a seamless, integrated shopping experience, regardless of whether they’re browsing in-store or on their smartphones. Or even doing both at the same time. 

In order to meet these expectations, commerce players have got to have an omnichannel strategy in place. From our point of view, the habits and preferences of today’s shoppers, combined with regulatory developments such as PSD2 and infrastructure improvements, will eventually but inevitably lead the way to invisible payments.

What does the future look like for the payment experience? 

I’d say that the future of payments is quite invisible. We can already see it happening in various forms today, such as through recurring billing models, or queueless checkouts and cashierless checkouts in brick-and-mortar stores. In fact, by 2023, invisible payment technologies will power USD 28 billion in transactions. So let’s take a look at what they all have in common.

Recurring billing removes any effort on the customer’s end while boosting profits and client retention for merchants. By 2022, subscriptions will account for 79-86% of global digital content spend. 

With one in four customers saying a long or complex checkout process causes them to abandon their purchase, queueless checkouts also seem essential for the future. Consumers worldwide are expected to buy more than USD 28 billion worth of goods through Scan & Go technology in stores.

Lastly, 60% of consumers worldwide prefer a cashierless shopping experience. We have no doubt that such stores are set to make a huge impact in the retail experience. We forecast that within four years, invisible payments from cashierless stores will be worth USD 8.2 billion worldwide. The next generation of payment tech encompasses two key ingredients that modern consumers are after: speed and convenience. Naturally, they will only increase in popularity over time.

How can retailers prepare for this trend and offer frictionless payments? 

There are different technologies supporting invisible payments. Retailers should always stay up to date with the latest on the industry and educate themselves on what new technologies they should adopt. Among these, we have tokenization, sensor fusion, cameras, machine learning, and data analytics.

One of the simplest ways that retailers can upgrade the shopping experience is by storing their customer’s payment details to enable a faster checkout in the future. Essentially, it’s a software that replaces a customer’s primary account number (PAN) with a unique string of randomly-generated numbers. The token can then be used to identify a customer without compromising their PAN, adding an extra layer of security to the payment to significantly reduce the threat of fraud. Meanwhile, the actual PAN is stored in a secure vault. Tokenization is a must-have for all commerce businesses that want to offer a seamless checkout experience. Not only does it safeguard sensitive cardholder data, we’ve also seen evidence in the ecosystem that tokenization can effortlessly raise conversion by up to 6%. That’s why tokenization is quite a buzzy word in payments right now.

What’s your advice for retailers to thrive in the industry? 

Get on board with approaching trends. The longer you wait, the more you’ll have to catch up on.

There are so many stats proving that invisible payments are only on the up and up. The first step in this direction would be to be aware of customer demands and start working towards offering a frictionless, omnichannel shopping experience. 

Give customers time to get used to the new practices. Although invisible payments will be the way forward, consumers will always need to get used to new technologies. In this sense, retailers should consider rolling out promotional and educational campaigns through which they can inform, engage with, and more importantly, reassure customers about any concerns they may have with these novel experiences.

Handle data responsibly. The more seamless the shopping experience, the more customer information retailers will eventually collect. To make sure they can count on customers’ trust, retailers should invest in services like tokenization, and to develop responsible AI practices. 

Make payments easy for both you and your customers. Retailers should work with a payments partner who can support them with tailor-made solutions that match their needs and goals. 

Apart from these tips, I’d recommend merchants and retailers to get the latest on retail trends by browsing our new ebook, Revealing the invisible. It’s a must read!

This editorial was first published in our Cross-Border Payments and Commerce Report 2019 – 2020, which provides a comprehensive overview the major trends driving growth in cross-border payments, cross-border commerce, and marketplaces.

About Ankur Sharma 

Ankur Sharma is Payvision’s expert for anything related to omnichannel solutions, tokenization, and seamless shopper journeys. As a Senior Product Manager, Ankur brings with him a wealth of expertise in building payment solutions that maximise conversion and keep businesses ahead of the curve.

About Payvision

Payvision is a global payment processor that’s driven by a passion for technology and simplifying payments. With one single, secure platform, we power transactions for businesses across the globe. We know our way around the latest techniques in artificial intelligence, omnichannel strategies, and advanced fraud prevention. The dedication to our clients shows – this is where we truly make a difference. By enabling an intuitive and flawless customer experience on all channels, we bring a unique beat to payments.