By Paul Parisi
Convenience has long been the driver of payments innovation. As customers crave greater ease in the ways they pay, the industry has responded with fast, easy, secure and seamless payment options.
These factors have combined to usher in invisible payments. Invisible payments take traditional payment methods such as cash, debit and credit cards and card readers out of the equation. In their place customers are able to use digital wallets for purchases.
Invisible payments are fast becoming the preferred way to pay for many consumers because they are quick and take place behind the scenes. Anyone who has taken a ride with Uber or Lyft has experienced an invisible payment. The friction that customers have long encountered when paying—whether waiting in line at stores, fumbling for the right cards or manually entering payment information on point-of-sale (POS) machines—is now reduced with invisible payments.
Smartphones have changed consumer expectations in how they experience the world around them through literally putting the world at people’s fingertips. These devices have also changed the way we shop and pay for things. They have accelerated the adoption of invisible payments by increasing access to online and mobile commerce. According to an eMarketer report, mobile commerce will account for 30 per cent of the $17.1 billion retail e-commerce market in Canada in 20181.
People now expect the same seamless experience in their payment methods as is commonly offered by companies like Starbucks with its Mobile Order and Pay functionality. This payment method accounts for more than 10 per cent of all Starbucks’ transactions and in peak hours at those stores the order ahead mobile orders are approaching 20 per cent of a store’s transactions2. Invisible payments deliver on this desire for payments to happen instantly and behind the scenes rather than at the POS terminals.
Invisible payments in action
Customers don’t want too many steps in the payment process. They want simplicity, speed and security and they want it in the palms of their hands.
People don’t engage in a transaction for the joy of the payment experience. People pay to experience the joy and the value in the things that they covet, want and need. Innovation that improves customer payment experiences and overcomes friction while also increasing security will be critical for payments, now and in the future.
Reducing friction to create invisible payments is a top priority for payment innovation. For example, PayPal’s One Touch feature helps remove barriers to online shopping by allowing users to remain logged in for easier and faster checkouts while keeping their full financial information secure. Powered by machine learning, detailed usage tracking and user device habits are captured to enable companies to successfully identify customers by matching their patterns.
Consumers continue to reinforce the value of this feature. PayPal’s One Touch has become one of the most rapidly adopted products in our history. 92 million consumers have opted in for the innovative checkout experience globally and at the end of the first fiscal quarter of 2018 more than 8.6 million merchants offered One Touch.
Examples of invisible payments have already been incorporated into commonly used services and products. Contextual commerce applications like Pinterest and Instagram buy now buttons and voice-assistants like Amazon’s Alexa are other examples of payments that are removing friction from the payment process. They enable users to purchase things they want within the platforms they’re on, with no interruption to their experiences.
In the automotive space, Internet-enabled connected cars are starting to communicate with gas pumps to pay for fuel. Mobile apps have revolutionized the way people pay for parking. With the GreenP parking app in Toronto, Ontario they don’t have to dash to the meters in the snow or rain to pay for or extend their parking: they can now do it remotely from their phones.
What’s next for the payments industry?
The future of payments will be largely influenced by the following technologies:
- Artificial intelligence (AI). AI and machine learning are being explored in the FinTech industry to deliver richer, data-driven insights that allow businesses to focus on delivering highly personalized purchase experiences;
- Virtual Reality (VR). Payment platforms are already being used inside virtual reality environments. Companies are exploring how VR technology can seamlessly let us explore and shop but also pay through VR technology with simple gestures;
- Blockchain. Blockchain technology will go beyond financial services by creating opportunities for data on the sources, identities, credentials and digital rights to be securely stored with distributed ledgers in many different industries from aerospace to retail; and
- Biometrics. Biometric identifiers, like voice recognition, fingerprint scanners and facial identification, are rapidly being adopted into payment technologies. And consumers are on board: 22 per cent said they would use facial recognition or retinal scans to pay for items in stores3.
For now, invisible payments are enabling transactions to take place in the background as payment providers and merchants prioritize experience and find more ways to reduce barriers to purchase. The payments industry will continue to be disrupted by consumer demand for ease and convenience.
Technological advancements will provide the tools the industry needs to respond to these demands. It will allow for the creation of innovative solutions that meet and exceed consumer expectations, ultimately leading the industry to the next-generation of payment innovation.
Paul Parisi is the president of PayPal Canada. Paul has more than 17 years’ experience in the payments industry. He holds a bachelor’s degree from the University of Guelph.
1 eMarketer, “Ecommerce in Canada 2018: eMarketer’s Latest Forecast, with a Focus on Grocery”, report, January 25, 2018.
2 “Starbucks drinkers embrace the Mobile Order & Pay program”, Internet Retailer, April 22, 2016.
3 Lisa Wright, “Canadian shoppers eager for new payment technology: report”, Toronto Star, October 8, 2014.