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Future of Retail — Payments Innovation


issue 02


ALTERNATIVE TO VISA AND MASTERCARD The vast majority of bankcard transactions seen by UK retailers are badged either Visa or MasterCard. This means that they will be processed using the Visa/ MasterCard networks, according to their rules and subject to their commercial rates. No practical alternatives existed until now which is why they have had so much power. However as a result of the investment made by the banking sector in building a real-time processing network, which is called Faster Payments, things are changing. These high-speed real-time transaction rails, although initially targeted at carrying payment transfers for consumers and businesses, will shortly be available to merchants with the launch of Zapp the Pay by Bank App. Near instantaneous payment transfers from one bank


account directly into another bank account offers many advantages and a great consumer experience. This will bring retailers greater choice and may help rebalance the negotiating position between retailers and banks.


OMNICHANNEL THE NORM With customers increasingly mixing and matching their shopping activity across a variety of sales channels we can expect over the next 10 years that retailers will remove the sales channel silos that currently exist. Having a single customer proposition and sales platform, which works across all channels, will also have significant impact on payments acceptance and transaction processing. We can expect to see a shift between payment


methods to those that offer improved user experience, heightened security and lower cost. Payment suppliers who fail to recognise this shift and readjust their proposition accordingly will be the losers.


CARDLESS TRANSACTIONS Current payment systems have relied on consumers inserting their card into the reader at the payment point or entering their card details when they checkout online. Processes and technologies have all been about trying to protect these credentials and transactions. In the future we can expect to see the consumers payment details stored securely for them, this may be within a digital wallet, within the consumers account file or in an App. ‘Card on file’ or ‘InApp’ enables a faster and improved transaction experience. Cash withdrawals at ATMs can take place today without a card ever being used so why not also within


Payments are increasing complex and the subject of growing regulatory demands, so any new payments strategy needs to be carefully thought through.


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