The way people pay worldwide is changing rapidly, thanks to the technological innovation driven by digitalization. As a result, how is payment evolving? In this post, Wirecard’s CPO Susanne Steidl highlights three promising payment trends that might be mainstream in the future – and which will eventually lead to the end of the traditional POS cash register.
The way we pay is changing fundamentally
Imagine for a moment that we are in the future. What does the world around us look like? Has Munich become a smart city, and can an air taxi – which is part of a connected mobility network – take me to my meeting in Frankfurt in no time?
Honestly, nobody knows. But what I am very certain is that the way we pay will have changed. Key trends for the payment industry like biometric technologies, the smart use of data to deliver an excellent customer experience or the complete merging of online and offline shops in an integrated unified commerce strategy will have become mainstream in the future. – I will go into this in more detail later.
Rapid change continues thanks to digitization
Digital transformation and other next-gen technologies and initiatives continue to dramatically transform payment processes and systems. The way we pay 10 years from now will look very different from how we execute financial transactions today – just as today’s payment systems are very different than what we relied on a decade ago.
In order to understand which global megatrends influence the way we pay, it is worth taking a look at the article series “Payment Megatrends” which has already been published on this blog.
Milestones in technological development such as Artificial Intelligence or Internet of Things as well as changing global consumer needs such as Borderless Payments, Financial Inclusion or a Frictionless Customer Experience make the payment ecosystem an extremely exciting area to work in.
A concrete look into the future of payment
We are moving into a world where mobile payment methods reign supreme. This begs the question: If mobile payments become the new normal, what are the next innovations or trends lurking on the horizon, poised to disrupt the market?
To name a few concrete examples: here are three in prototype today that I believe will shape the future of payment.
1. Biometric identification payment technology
Biometric identification payment technologies rely on either physical characteristics, such as a user’s fingerprint, a facial feature or a behavioral trait such as voice. Using biometrics for payments has a number of benefits. Payments are more secure, as personal data doesn’t have to be stored on-premises or in the cloud. The process gets faster and easier. And the technology helps retailers customize the shopping experience based on each individual’s preferences, purchase histories and average spend.
We’re seeing more and more biometric identification technology in the payment world today. We all know Apple Pay’s confirmation by fingerprint or face-ID – but now check out Alipay’s “Smile to Pay” to get an idea of how the technology works even without needing a device:
Even though this solution is currently only available in China, here we see an important global trend: thanks to biometric technology, payment becomes safer, more convenient and more frictionless.
2. Payment with data
In the future, in some cases we could see personal data – a picture for example – compete with money as the primary form of currency. To get a better idea of what I’m talking about, check out this video of Kaspersky Lab’s “Data Shopping Social Experiment.” In September 2017, they opened a store in East London’s Old Street Station selling prints and merchandise by street artist Ben Eine. But money couldn’t buy you anything there. I think it’s fascinating to see how customers react.
And even if we only see an experiment here, the topic of the smart use of customer data – with their explicit consent of course – is very important.
For example, as a customer, I could well imagine sharing certain data with my favorite fashion store in order to receive personalized offers and discounts that fit exactly to my individual needs. This is the direction retail is taking. Because it allows to offer a truly outstanding frictionless shopping experience to customers.
3. The convergence of offline and online retail
Retailers already started some time ago to merge the best qualities of the online and offline shopping experience. The Amazon 4-star store in New York is a great example of this burgeoning trend. The physical store sells the most purchased items from the Amazon website. Staff frequently rotates inventory based on online popularity. Products are accompanied by reviews from the Amazon site, and customers benefit from an immersive offline and online experience.
More generally speaking, the boundaries between physical and online commerce are becoming completely blurred. Ordering a product online and picking it up offline or buying it in a store and then ordering one size bigger online is becoming standard – already today, worldwide there is no alternative to Unified Commerce if you want to succeed in retail, as by the way our Holiday Shopping Report has also clearly shown.
Conclusion: Digital technology is significantly changing how we will pay tomorrow
Innovation in the payment world is thriving, and the groundbreaking digital technologies are sure to bring unthinkable progress to the industry over the next decade. And there is nothing more exciting for me than to be part of this development.
Digital payment technology contributes to a cashless world, diversifies the portfolio of commerce tools, and leverages innovation to help companies deliver a stronger, seamless and more personalized customer experience. For retailers, all these technology developments are making physical cash registers at the POS more and more superfluous. Financial institutions develop global payment ecosystems that break down geographical barriers, so payment systems are as mobile as their users. And more and more people have access to digital payment systems than ever before.
In short, digital technology is simultaneously transforming both the payment experience and organizations’ business models. It ensures that payment becomes ever safer, easier and in some cases invisible, being fully integrated into the purchasing process.