The constant and accelerating march of new technology in payment systems will keep the whole sector on its toes in 2017, as new platforms continue to emerge, new standards are debated and large corporations such as Apple and Amazon have an increasing influence on the way transactions proceed.
At SIX Payment Services, we believe that there will be three major trends that will shape the industry in 2017.
Unique ID for seamless commerce
To allow a paying customer to be identified across all channels, information about the type of transaction via a unique ID would simplify the payment process and allow merchants to track new and existing customers, so that they could optimise their offering. This requires the move to a single payment platform. Although some payment service providers are actively developing a payment platform that can incorporate all touchpoints and channels, there is no legal precedent for this and no established way to determine who would own the data.
A unique ID has significant implications for data privacy requirements as well as risk and fraud prevention. The need for enhanced ID verification has grown more urgent as criminal groups have become more adept at accessing card, banking and private data details. On top of these data, they are also accessing the wide range of information which corporations worldwide are gathering in order to identify consumer spending habits. To help prevent such fraud, one option gaining traction in the payment sector is the creation of apps which consumers can use for authentication, storing their encrypted identity and allowing them to share their data with companies while retaining control of it.
Full checkout in e-commerce
The two competing demands of speed and security will come under increasing pressure in 2017, as payment providers seek to make mobile e-commerce more accessible for a growing number of consumers. Reducing the high ‘drop out’ rates in mobile transactions is a top priority, with companies such as Mastercard introducing the Masterpass digital payment solution through which consumers enter their email addresses as their user name and a personal password to complete a purchase.
As the mobile payment environment matures, more companies will adopt proven best practices, taking note of consumer preferences and the popularity of sites such as Amazon and Domino’s Pizza, which have reduced the steps needed to make a purchase to the bare minimum.
Here are some examples of best practice in seamless commerce:
- Use predictive entry tools to save consumers from excessive typing (but disable auto-correct on certain fields such as surnames and addresses)
- Copy shipping address to billing address
- Provide clear error messages to help users solve issues
- Consider using a one-page checkout
- Provide a clear progress indicator and a summary of order contents
- Give visual reminders of payment options, price and shipping method
- Weigh up whether account creation is a necessary part of the process: this can be off-putting to many consumers and cause them to abandon the transaction
Since abandonment levels from mobile devices are running at 84 per cent (according to figures from cloud.IQ) compared with 68 per cent from desktops, there is a huge incentive for companies to improve their e-commerce checkout technology and improve fulfilment rates.
Payment through marketplaces
Large global marketplaces such as Amazon or Etsy offer a platform for millions of large and small traders to sell their products, facilitating transactions through numerous payment methods. This versatility is appreciated by consumers, who can choose a payment system to match their specific account and budgetary needs.
When merchants route orders through their own websites, however, the available payment options may be much reduced. This can lead to high abandonment rates, when consumers are not offered their preferred payment method.
Technology is changing not only consumer demand but also the range of payment options that merchants can now provide both online and in store. It is important to stay aware of payment and consumer trends to avoid missing out on sales due to lack of payment options.
This is where cooperation with the right payment services provider pays off, as they are able to consult merchants on the optimum mix. When selecting a payment services provider, merchants are advised to consider the reputation and track record of the company: are they seen as reliable and secure, with a strong history of consistent performance? Are they known for blocking funds without good cause? Look for a reputable company with a strong client list.
General market trends
With PSD2 and the regulatory required changes looming, 2017 will be marked by a focus on implementing these new regulatory requirements, as well as the difference in positioning of the payment industry, where the core attention is shifting away from issuing to acquiring. One of the recently stated aims by European regulators is open access to accounts: this could further disrupt the industry, along with the continued loss of revenue to the payments industry from imposed rate caps.
Banks, together with their payment providers, including SIX Payment Services, are eager to remain independent from global operators such as Apple and Samsung, as well as specific card schemes. At SIX, we believe that there are many opportunities across Europe for organic growth, in alternative wallet systems for example.
2017 is set to be a year of change across the payment landscape, including card, mobile and biometric-based payment systems. How well different services adapt and are accepted by consumers will shape the industry for the future.
Roger Niederer, Head Merchant Services, SIX Payment Services
Image Credit: Håkan Dahlström / Flickr