By Craig Duggan, Commercial Manager at Transaction Junction
New trends in the payment space, coupled with a growing realisation that the retail experience today is driven by the consumer, will be among the drivers for significant change in this market space.
As we move into 2020, a date which replaced the year 2000 in many science-fiction writers’ quivers, it is worth looking at what kind of change we can expect as their ‘future’ becomes our ‘present’. While it is difficult trying to predict the future, it is also worth remembering that new things are seldom dreamed up and invented on the fly – there is usually a long development road first. Therefore, while this road is certainly becoming shorter, if we consider where we have come from and where we are now, we can begin to infer certain key trends for the near future.
In the e-commerce sector, from both a shopping and a payment point of view, the use of mobile phones for these purposes is only going to go from strength to strength. After all, mobile shopping is already being widely embraced, as it essentially means users have a virtual shopping mall in their pocket.
Mobile devices are unique in that they operate well within the e-commerce model yet work equally well in a brick and mortar retail environment. The use of a phone as a means of making a payment at the till is mostly fuelled by the convenience factor it offers. After all, people often lose wallets, but they take much greater care of their mobiles, as their lives revolve around these devices.
Naturally, as we head further outside the metros, we see less use of this technology, but thanks to the use of QR codes and Near Field Communications (NFC) – what is called ‘tap and go’ technology – consumers in these areas are now becoming more comfortable with this technology. This is partly influenced by the fact that holiday makers have headed into these areas, the demand for it has grown, along with its acceptance.
In fact, the financial services sector and the payments industry need to continue working together to drive this forward. Remember that the retail experience today is driven by the consumer, and these organisations must be prepared to accept whatever payment method the customer wants to use, while at the same time assuring the retailer that they will be paid.
Another trend that will become more visible this year is what we refer to as hyper-personalisation. This is when fintechs are able to leverage the huge amounts of available data related to a consumer, in order to drive insights to help businesses to gain a better understanding of their customers. As more and more data becomes available – from areas like social media, financial transactions and even browser history – this will be coupled to artificial intelligence (AI) and analytics to enable a personalised customer engagement that delivers them real time information.
A classic example is a consumer who fills up at a petrol station. The AI can determine from previous purchases that the consumer loves coffee and can inform them of the specials available at the garage’s own coffee shop. Previously associated mostly with online shopping, 2020 should see this trend entering the omni-channel space.
The Internet of Things (IoT), of course, goes together with the collaboration between fintechs, the banks and the payment facilitators. Together this creates a more powerful entity, as it significantly increases the amount of data that can be leveraged to improve the consumer experience.
Of course, no insight into future trends would be complete without mentioning Blockchain which, although it’s been around for some time, should grow significantly in 2020. We will witness an increasing number of organisations playing around with the technology and learning about it, as from a regulatory viewpoint, there is much interest in what it can offer.
Blockchain is ideal for the delivery of smart contracts, digital payments and even identity management, making it immensely powerful in combating fraud and the efficient use of Blockchain will be at the forefront of creating a far more secure transaction process. Thus, we will see increasing implementations, of this and as it gains momentum, it will move away from being something spoken of in hushed tones – as if it is something only a Bond villain would use – and into the mainstream.
In 2020 retailers will continue to expand the convenient payment services in-store, as an increasing number of common layers are forged between retailers and the financial sector in respect of consumers. Something like airtime, after all, can today be purchased at a retailer, but also via a banking application. This is a service common to both, that is simply offered through different channels.
It is this commonality that is driving the growing collaboration between these entities; a way to ensure the rich layer of experience continues to exist for customers, wherever they are. We are now at the point where there is a focus on making it easier for the consumer to transact, combined with an understanding that the customer is common to both sides. Of course, the leaders here will then be the businesses that are able to distinguish themselves via the richness of their approach and the delivery of an exceptional customer experience.