2018 saw great strides in payment innovations, including the ramping up of contactless spending to increase customer convenience, as well as the rise of subscription-based services. As we move into the new year, it is likely that we will see these trends accelerate, as the quest for customer convenience increases through a rise in ‘invisible payments’.
As developments in payment technology become increasingly more advanced, the challenge for payment innovators will be to break down the assumed ‘trade-off’ between convenience and safety, whilst driving these innovations forward.
For invisible payments and the technologies that enable them, we will no doubt see a continuation in the focus on consumer security and control, as payment methods become more innovative and require less direct management from consumers.
From contactless to invisible payments
Consumers are increasingly looking for ways to increase speed and convenience in their daily lives, often prioritising options that minimise their time and involvement over price. One technology that takes advance of this trend is invisible payments, which remove the need for customers to physically pay for a transaction – there’s no need to reach for cash or a card – everything is taken care of in the background, digitally.
We have already started to see mainstream adoption of invisible payments, and I predict that they will only get more popular in 2019. One example that sparked people’s attention this year was the growing number of cashier-less Amazon Go stores, including recent speculation that Amazon is considering opening locations at major airports. And then of course, there is Uber, the on-demand transportation network linked to customer accounts which has become a part of normal life for so many.
Barclaycard has also implemented its own initiatives to simplify the payments process. In 2018, we trialled ‘Dine and Dash’, which allows restaurant-goers to pay automatically for their meal, and leave once they were finished, without even having to ask for the bill.
The new invisible payment solutions of 2019 will doubtless fuel further conversations about the move towards a ‘cashless society’, but in reality, the debate around cash disappearing is a red herring. In my opinion, the future of payments is in fact about giving consumers control over how they way want to pay. It’s simply not the case that consumers will automatically switch to the new forms of payment, because every type of payment – from cash, to cheques, to QR codes, to contactless – has its place in different circumstances.
However, as invisible payments gain momentum, we’re also seeing a parallel trend emerge whereby consumers still want to know that they are in control. At any time, they will want to know who has their payment details, when payments are going out, and whether they can revoke access if necessary. It will be interesting to see where invisible payments providers factor this need into their solutions next year.
Rise of pay to use
2018 also saw the growth of the ‘Pay to Use’ economy. We saw a shift in consumer priorities, moving from the desire to own products and services, to simply wanting to be able use them. Combined with households tightening their belts, this has meant that consumers are now much more inclined to rent out or subscribe to services, rather than to buy them.
2018 has seen the introduction of ‘Pay to Use’ services such as car sharing apps, Zip Car and Turo. And what this shows us, is that in an age of payment innovation, consumers are looking for the flexibility and lack of commitment that ‘Pay to Use’ services offer.
However, as new subscription-based services join the scene in 2019, the market will become increasingly congested. Brands hoping to find long-term success will need to make sure that their business model relies on more than just applying the ‘Pay to Use’ model to a different sector, service or product. To really bring added value to consumers, they will need to find something that truly simplifies their customers’ lives.
The IoT age – Navigating the new normal
As payment technology continue to advance, it is important that providers bring consumers along on this journey, demonstrating how each new forms of payment can help bring convenience in different circumstances. With IoT and smart appliances becoming more mainstream, retailers are marketing everything from connected fridges to smartwatches – opening up opportunities for many different payment touchpoints. As we move into 2019, we expect to see more companies explore how they can combine payment capabilities with IoT devices.
However, given that consumers typically replace their white goods gradually over time, it will be a while before we’re living in a world where IoT is embedded into every device in our home. Having said that, it’s vital that IoT hardware providers place data security and privacy at the heart of every product, otherwise these devices could become the weakest link the chain, making customers vulnerable to fraudsters.
2018 has seen the normalisation of contactless and invisible payments, with customers always on the lookout for new technologies that make life simpler and payments quicker.
We’ve seen the rise in contactless spending and a proliferation in subscription-based services, and this isn’t likely to slow down in the year ahead. For 2019, the key challenge for companies will be to provide services that make life simpler for consumers, streamlining the customer experience and offering more convenient and quicker payments.
However, an additional focus in 2019 will likely be on data and payments security, if payment innovations are to be fully embraced by consumers.
Nick Kerigan, Managing Director of Future Payments, Barclaycard
Image Credit: Håkan Dahlström / Flickr