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Future of Retail — Payments Innovation
issue 02
Gartner foresees that “half of all consumers will use wearable
technology or smartphones for mobile payments by the end of 2018.”
2019 . The share of merchants earning at least 30% of their revenue in the mobile channel will triple from 9% to 29%, according to TeleResearch Labs. Consumers want mobile payments to be as
frictionless as any other interaction, making one-click payments appealing to merchants. This has tremendous implications on the way payment solutions are designed: everything should start from consumer expectations and their desired journey. Ovum predicts that the installed base for wearable
devices will reach 650 million worldwide by 2020, while Gartner foresees that half of all consumers will use wearable technology or smartphones for mobile payments by the end of 2018. Five years ago, Ingenico helped to realise Steve Jobs’
vision to integrate a point of sale (POS) terminal into a smartphone for easy checkout in Apple stores. We were among the first to push EMV mPOS solutions on the market and have heavily invested in mobile payment pages to make mobile commerce simple and secure. We are already exploring ways to integrate payments in the ‘next to come’ channels, such as connected cars, so that payments become embedded into our daily lives and merchants can capture conversion wherever the customer shops.
A GLOBAL SHIFT IN PAYMENT PREFERENCES Although commerce is global, payments remain local so that consumers can pay using familiar methods. Meanwhile, banks aren’t keen to send customers’ money to foreign acquiring banks. There is complexity in currencies, reconciliation, reporting, security and fraud prevention. But without overcoming these complexities, merchants will struggle to maintain their customers’ trust. The British Retail Consortium’s most recent annual
Payments Survey found that new payment approaches from contactless to alternative, non-card payments are increasing their market share. Currently, we believe alternative payment methods are complementary to
cards, as they do not share the agnostic and universal characteristics cards have, but over time this will change. Cards enjoy globally unrivalled issuance and
acceptance networks, making them the only universal payment method that merchants and customers trust, especially in terms of security, certainty of funds and reputation. Technology is enabling cards to evolve and become as virtual, seamless and frictionless as wallets. Advancements such as tokenization, secure elements, NFC and scheme rules that easily adapt to consumer behaviours and the shift to mobile create exciting possibilities for the future. One third of the conversations tracked in MasterCard’s
2016 Mobile Payments Study referred to biometrics and 55% of these conversations were driven by facial recognition or so-called ‘selfie pay’, with consumers also interested in fingerprint identification. MasterCard is already providing such capabilities, while voice verification is being used by Santander and will eventually offer the ability to make payments.
SECURITY IN THE FUTURE OF PAYMENTS Security and risk management will be of utmost importance as we move forwards. According to a 2015 Javelin whitepaper, 15% of all legitimate cardholders experienced at least one decline because of suspected fraud in the previous 12 months, resulting in a total of $118bn in potential sales declined. If a customer visits a site where their card information is compromised or incorrectly declined, they will become frustrated. 26% of declined genuine shoppers reduced their patronage of a merchant and 32% stopped shopping with the merchant altogether. This shows the critical importance of marrying consumer experience with intelligent fraud management, especially for a successful future. Merchants and payment providers must constantly be
ahead of the game by choosing the right technologies, implementing strict data protection methods and
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