Over the past two years, we have witnessed a payment revolution in our daily lives. Today, new payment methods and SoftPOS apps facilitate contactless payments while e-wallets, Buy Now Pay Later (BNPL) options and super apps create a seamless customer experience and continue to redefine the customer journey. purchase. At the same time, the physical payment cardintroduced 70 years ago, is not about to disappear: it remains an important element of our multiple means of payment.
From a sustainable evolution to a rapid payment revolution
It is only in recent years that we have witnessed a true payment revolution: an ever-increasing amount of new means of payment – and new channels – to pay and get paid. Consider shopping and just walking out of an Amazon Go store without any payment interaction or visit your favorite café where your pre-ordered (and prepaid) latte macchiato awaits you on the counter (22% of Starbucks transactions in Q3 2020 were mobile orders). Imagine your printer being able to detect low ink levels and order new chargeable cartridges without any human intervention*. It’s no wonder then that 70% of millennials think their way of paying will look totally different in five years. Below, we’ll take a closer look at some of these new payment methods.
New means of payment for traditional transactions
If you had walked into a random store anywhere in the world a few years ago, you would probably have seen close to 100% of customers paying with cash or by swiping or dipping a contact-only payment card into a point of sale terminal. Walk into that same store today and chances are many customers are now paying using their contactless card or smartphone (or scanning a QR code, depending on where you are). Some might even touch a wearable accessory such as a wristband or keychain. Today you can repay a friend with a peer-2-peer app, whenever and wherever it’s convenient for you – your friend Instantly receives money from your bank account. Instead of writing a check, you can also pay your plumber by tapping your card on their smartphone with a SoftPOS app (or on an mPOS device). You can even pay for gasoline from your car’s infotainment system rather than using the pump’s POS terminal.
A reimagined shopping journey with e-commerce, social commerce and awesome apps
In addition to paying in new ways in traditional channels, it’s worth remembering that we are also buying in many more channels today than just a few years ago. the rise of e-commerce has been meteoric, introducing many new payment methods. Electronic wallets as well as Buy now, pay later (BNPL) first emerged in the e-commerce channel and then spread to physical stores. In the traditional online shopping journey, the consumer pays first and then the goods are shipped. With BNPL, this paradigm is reversed: the consumer first receives the goods, then pays. This means that not only is there a new channel to shop (e-commerce); there is also a new time when the actual payment takes place (after the arrival of the goods).
It could be said that an important part of the traditional purchase journey is missing in e-commerce: human interaction. This could explain why live broadcast quickly becoming the next hottest trend in commerce: it’s the digital equivalent of going shopping with a friend or chatting with a store associate. As with so many other phenomena, Asia is leading the way social commerce: In a single day of the Alibaba Shopping Festival, Chinese star streamers Li Jiaqi and Viya sold goods worth nearly $3 billion. Also in Asia, applications originally designed for a single purpose (such as social media or carpooling) have now evolved into what are known as ‘super apps’ with many additional services and features– a way to extract more value from their large initial audience. To facilitate digital payments, many great apps have developed their own 1-click e-walletswhich have become so popular that they are not only used to pay within the app ecosystem, but also with in-store merchants.
Improve and accelerate the purchase journey
In a physical environment, consumers typically complete their shopping journey by queuing while waiting to pay a cashier behind a counter, but that traditional journey is changing. Imagine that a consumer tries on a black t-shirt, but in the fitting room realizes that black is not his color. With a POS terminal inside or right next to the dressing room, they can scan the t-shirt and see that there are also green t-shirts available in the store. A press of “try on” on the POS terminal screen, and just a moment later, a store clerk brings the green t-shirt to his waist. The consumer can then select “pay” on the point-of-sale screen, then press their card to make payment. In this scenario, the POS becomes an informed interaction point**; this eliminates the need to walk to the cash register and wait to pay.
Payment: the central point to enable additional services
In many emerging customer journeys, the act of paying is no longer an isolated event, a separate workflow, a discrete experience, or an afterthought.the payment experience becomes part of the broader customer journey. Consider taking an Uber: at the end of the ride, you simply get out of the car and barely notice that you actually paid. New payment methods require less action from the consumer while enabling a more integrated, seamless and frictionless commerce experience. Adjacent payment financial services, e.g. credit, are integrated into the “customer-facing brand” experience via Banking as a Service (BaaS).
They are offered at the precise moment and at exactly where the consumer needs it. Consider shopping online and being offered a line of credit on an e-commerce site when you pay, such as a BNPL option. This is exactly where you need it; exactly when you need it. Now contrast that to the more traditional journey of applying for a line of credit long before you actually need it – in other words, not when you need the credit – by going to a bank branch (not to where you will actually need to use the credit).
Physical and digital payments thriving side by side
In this payment revolution, where is the physical payment card? Well the fact is, the physical payment card has never been so widely used as today. RBR forecasts global card purchase volume to nearly double between 2021 and 2026 (from $41 trillion to $75 trillion)***. We are beginning to see the shape of a payment future in which established and new payment methods flourish side by side. If we go back to where we started this article, Sweden (arguably one of the most advanced payment countries in the world) can serve as an illustration of this phenomenon: a whopping 73% of the Swedish population of 16+ uses e-wallet. Swish app on a weekly basis. But that doesn’t stop the average Swede from paying with their physical payment card 349 times a year.
* For initial setup, such as when the consumer registers a card in the cartridge merchants online store, there may be cardholder authentication, and some regulations may require some form of human authentication/consent to the following. transactions.
** Worldline, Redesigned In-Store Payments, 2021
*** Global Payment Card Data and Forecast to 2026 (RBR)
About Jesper Domargard
Jesper has real experience in different parts of the payments ecosystem and held various leadership positions at Visa and Worldline before joining IDEMIA. Responsible for marketing IDEMIA’s global payment offering, Jesper is a frequent speaker at various events and holds a Masters in Business Administration from Linköping University, Sweden.
IDEMIA, the global leader in Augmented Identity, provides a trusted environment for citizens and consumers to perform their day-to-day critical activities (such as paying, logging in and traveling), in both physical and digital space.