By Steve Doswell

The key to understanding the landscape of payments is to observe the customer attractions and motivations. From convenience to speed to security, market needs will always drive innovation and advancement.

Following closely to the over-arching trends of consumerism, payment developments have continued to skew towards online and mobile usage on-site. Also, in the mix is peer-to-peer: bank to bank apps have allowed individual consumer users the ultimate convenience of reconciling a restaurant bill or the cost of concert tickets between multiple parties on the spot.

Here are the road signs pointing to where payments are going:

Successful approaches to alternative payments

Convenience is the most commonly cited factor when it comes to deciding on alternative payment methods. Automation of payments through digital wallets and other means has changed consumer behaviour drastically and have proven to increase usage by facilitating spontaneous decisions.

Automated payments to enhance experience

Counter-style food and coffee vendors such as Shake Shack and Starbucks have integrated order-ahead, pay-online options on their apps, enabling their customers to place orders through them and have the purchases ready for pick-up upon the customers’ arrival. Either the romanticism or sheer time efficiency of skipping the lines during peak hours motivates many customers to embrace such apps and drives recurring usage (and purchases).

Mobile payments

Smartphones have changed user behaviour toward payments, and subsequently the structure of point of sale (POS) systems and purchasing platforms. ApplePay has made POS and online purchases seamless in various apps, enabling access to the customer’s credit card at the tap of a finger. In general, one-tap transactions are facilitated by digital wallets and in-app purchases and are now offered by several financial institutions and major consumer brands.

The highs (and low) of digital wallets.

A research paper published by Ovum has estimated that digital wallets and instant payments will have completely replaced cards by 20241. This means that all payments will eventually be digitized.

Retailers and service providers must therefore accept the inevitability of automated payments and be prepared to adopt and integrate the underlying technologies into their business models. Consumers will benefit from the convenient experience of one-touch payments while retailers and service providers can capitalize on spontaneous decisions and minimal friction between purchasers and products. Everybody is poised to win in the land of digital payments.

In-app purchases

An extension of the digital wallet element is the concept of in-app purchases, which is one of the highest revenue-generating avenues for digital merchants. Once again, playing on customers’ sense of spontaneous needs, in-app purchases mitigate the current friction between buyers and transactions.

Direct debit

Consumers tend to prefer subscription-based programmes either for security concerns or to leverage retailer price breaks as rewards for paying up front or agreeing to recurring payments. For this purpose, direct debit has also become a prevalent form of payment for recurring purchases or bill payments.

Security

The ever-present elephant in the room is the issue of security. As payments become increasingly digitized, the threat of hackers and security breaches rises, leaving many consumers reluctant to adopt these new technologies. Retailers are obviously aware of this and many are partnering with established transaction facilitators such as Square and ApplePay in order to leverage their security umbrellas in their order fulfillment channels.

That being said, consumer wallets have been vulnerable to security breaches. All sorts of companies have been on the unfortunate ends of data breaches, with millions of pieces of consumer data compromised. There is also the simple risk of losing one’s phone. Digitizing one’s entire wallet seems like a convenient idea until the phone is lost or stolen, leaving one to wonder if the wrong person now has access to their entire wallet.

In reality, physical cards are just as if not more risky than digital wallets if they are lost or stolen. But many consumers are unable to recognize this, most likely the result of comfort with the established way of doing things combined with fear of the new.

Creative solutions

It is clear that digital payments are an undeniable wave of the future. In less than a decade, experts are predicting that all other forms of payment will become obsolete. Since hackers and digital destruction facilitators are constantly seeking new ways to steal funds and dismantle platforms, companies must be creative in determining how to best create their transactional platforms while keeping customer data safe and secure.

Considering ways to protect customer data that will stay ahead of the hackers is the key in gaining trust and building loyalty. After all, there is no point in becoming on online merchant if no one trusts your platform.

Soundpays has been designed with leading edge security standards in place to thwart data breach attempts. Relying on soundwaves unique to each customer adds a protective layer to their purchasing data. Additionally, customer information never remains static; the data is housed on remote servers that refreshes their IP addresses every 30 seconds. This gives hackers a next to impossible opportunity to take advantage of data vulnerability.

The future of payments resides in both new methods and in security considerations and mitigating the vulnerability of customer data. Thinking outside the box and considering creative transactional solutions like Soundpays will position your firm to be a trusted merchant in your industry. Put the security of your customers’ data as the ultimate priority and your customer base will thank you for it.

Steve Doswell is CEO, Soundpays (www.soundpays.com).

1 Matthew Heaslip and Kieran Hines, “Instant Payments and the Post-PSD2 Landscape”, Ovum, study, June 14, 2017.

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