Technological advances in the payments industry have conditioned consumers to expect constant innovation from merchants and issuers. Consumers expect to use less (or no) cash and have embraced innovative payment technologies like contactless PayWave and PayPass, payment rings, and mobile wallets for everyday purchases. Consumer behaviour is changing with advances in mobile devices, big data, cloud computing, IoT and machine learning. While traditional methods of payment like cash and credit cards won’t disappear anytime soon, the changing face of payments is driving one of the most profound shifts in how we pay for goods and services.
These changes have also challenged both financial institutions and businesses to evolve how they protect their customers and themselves from fraud chargebacks, and other risks that can result from emerging technologies.
Retina and ear scanners, fingerprint IDs and facial recognition methods, which even a few years ago were a thing of the future, are now a reality. Every day, more and more Australians are using ApplePay on their iPhones and iWatches to complete transactions. These payment technologies are revolutionising the world of payments, which makes it an exciting period for both consumers and businesses. Payments are not only becoming faster and more secure for customers, but for businesses it means added automation, better service, quicker processing times and improved cash flow. Apple’s facial recognition technology is cutting-edge now, but this is only the tip of the iceberg when it comes to the rapidly evolving world of payment technologies. Here is what we can expect to see in the future:
1. Contactless payments to become truly ‘contact-less’
For most people, contactless payments refer to PayWave and PayPass, using Apple Pay on their iWatches and iPhones. However, it is much more than that.
For example, take Amazon Go store in Seattle, which features no checkouts or queues. The in-store technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When they’ve completed their shopping, customers simply leave the store and their Amazon account is charged.
2. Biometric passwords to unlock payments
Several years ago, Apple, Samsung and other manufacturers introduced facial recognition and fingerprint scanning to unlock phones. Amazon advanced the technology by patenting a system that allows users to unlock phones and potentially make payments using their ears.
The system works in a similar way to fingerprint recognition, based on the fact that ear shape is unique to each person. More recently, Visa entered a programme into beta: contactless payment-enabled sunglasses.
Take it up a notch and consider insertable microchips, which are inserted under the skin to enable you to open doors or enter a festival with a sweep of a hand, or connect to your bank to make payments. The upside? Losing your card is no longer a problem!
3. New digital currencies
Everyone has heard about Bitcoin and cryptocurrencies, which are blockchain-based digital currencies that promise global commerce without exchange rates, full price transparency and an independent currency without the risk of inflation. While in the embryonic stage, cryptocurrencies can change the way we transact business.
Combine this with the future of contactless payments and you start to envision a truly mobile-enabled world.
Payments innovation will continue to reshape Australia’s banking and finance landscape. While adoption will happen in stages, our ever-changing industry is leading us to a future in which card payments replace cash as the preferred payment method for consumers and businesses alike.
