As the fintech revolution gathers pace, retailers must have an eye on the key trends shaping the industry in order to stay ahead of technological transformation already underway. Here, Ingenico outlines seven key trends that will have a profound impact on the sector.
The way that people shop is rapidly evolving and the delineation between online and offline commerce is becoming more blurred – aside from day-to-day purchases, shoppers are increasingly researching products online before visiting a store to see them in person and then many revert online to order.
Such trends make it ever more important for retailers to adopt an omni-channel approach, which simply put is multi-channel executed seamlessly: the customer easily switches between web-enabled devices and bricks-and-mortar stores, their preferences effortlessly transferred from one medium to the other.
Omni-channel bridges this gap between the real and virtual world, although to succeed two distinct types of transactions must merge – “card present”, which refers to in-shop transactions, and “card not present”, which relates to transactions conducted online and through mobile (often contactless) payments.
We see the future of payment being mainly the addition of smart interactions with consumers. There are going to be more and more points of interaction. We’re quite convinced that putting payment in Internet of Things will create more channels so you’ll be able to interact on the screen, in your car, your TV - everywhere there’s intelligence and you can put a point of interaction we will put secure payment and integrate this within business applications, said Michel Léger, EVP Innovation, Ingenico Group.
Last year’s move by most major messaging apps including Facebook to share their APIs with third-party developers will drive growth in social commerce among tech-savvy consumers.
API sharing allows retailers and other merchants to create artificial intelligence bots that live within a messaging app. These apps can sell products to users without them having to switch applications – a crucial attribute reducing the barriers to sale and enabling a seamless consumer experience.
The rise of social commerce also reflects the increasing predominance of social media as the gateway to the Internet – by late 2015, Facebook surpassed Google, accounting for 39% of all web traffic versus the search giant’s 35%, according to Activate.com.
Messaging and social media are emerging markets for retailers. It’s important to enable those messenger applications for the merchants to accept payments in those channels without pushing the consumer to escape from those messenger applications. We expect to see a continuous evolution towards more technology, more digital experience within retail and as a consequence within payment," said Pierre-Antoine Vacheron, EVP and CEO of Ingenico ePayments.
Adoption of mobile and other Internet of Things-based (IoT) transactions are set to soar. Mobile and contactless payment will be worth nearly $100 billion annually in 2018, up from less than $35 billion in 2015, according to a recent study by Juniper Research.
The potential of smart watches and wristbands have excited NFC (near-field communications) stakeholders, although it’s NFC-enabled smart phones that will deliver the overwhelming majority of revenues, at least in the near-term.
Juniper forecasts wearables will account for up to 2% of non-card contactless payments by value in 2018.
Many retailers have failed to keep up with the tech advances that are transforming the concept of POS, but that is about to change as stores increasingly move away from the traditional checkout model of processing customers’ in-store purchases.
Some retailers will start selling commoditized, high-volume products at unattended kiosks, while other means for customers to avoid checkout queues will become a more common sight.
Payment is totally linked to commerce. It’s a critical phase in commerce – if you don’t have payment you don’t have commerce and if you have commerce and you don’t have payment you can’t sell or purchase. So, the evolution of payment is totally linked to the evolution of commerce. Ingenico is best placed to address these evolutions of payments which are linked to the evolution of commerce," said Jacques Guerin, EVP Smart Terminals & Mobile Solutions, Ingenico Group.
In 2016, first Visa and then Mastercard and American Express launched open platforms so that developers could use the credit card firms’ respective APIs to create new payment applications and software.
That financial institutions released this proprietary data shows a revolution in industry thinking as banks and the like accept that without partnerships and collaborations with fintech firms they cannot keep pace with their rivals that do.
The fragmented state of the various financial institutions’ APIs may slow the pace of innovation, although developers will attempt to pull-off logistically difficult API mash-ups where they integrate the APIs of several different companies to create pan-platform products. Eventually, APIs are likely to become standardized.
With new open platforms that are available, we will see app developers bring in the next generation of innovative payment and point of sale applications to the market,” said Richard Giannini, SVP Product Development, Ingenico Group Canada.
Security concerns were the most commonly cited reason for not using mobile payments, according to research by First Annapolis Consulting.
Nearly two-thirds of respondents who had yet to make such a transaction named security among the factors stopping them, while 42% said they had no need for such services and 41% said they had privacy worries.
Yet mobile wallets use tokenization and encryption technologies that actually make mobile transactions more secure than swiping cards through magnetic card readers, and understanding of these increased security features set to rise among consumers in the near future.
Tools such as point-to-point encryption (P2PE) and tokenization will become more widespread, for mobile and credit or debit transactions alike.
One of the big things that’s been happening over the last year and what can continue to happen is that there’s significantly greater adoption of security solutions both from solution providers and customers,” said Rob Martin, VP of Security Solutions, Ingenico Group North America
The number of mobile wallet options will continue to increase until a clear “winner” takes over the market – such clarity is unlikely to occur soon and so consumers will probably try out more than one option to decide which type of wallet or wallets they prefer.
Among the most popular in developed markets are Apple Pay, available in 13 countries across Europe, North America, Asia and Australasia, plus Android Pay and Samsung Pay – all of which are only available on mobile devices produced by that manufacturer or using that operating system.
There are also mobile wallets specific to a particular bank or credit card company, or to a store or outlet such as Starbucks or Walmart.
The outlook for increased uptake is bullish - eMarketer predicts the value of U.S. in-store mobile payments will reach $314 billion by 2020.
Mobile wallets may soon get some real traction … where you actually see mobile wallets used habitually by consumers. It’s not something consumers can use everywhere but what you’re going to see happen is mobile wallets will become more than just an alternative way to pay. It’s going to be tied to loyalty offers and you’re going to see for the first time a benefit to the cardholder, when they’re using a mobile wallet,” said Greg Burch, VP of Strategic Initiatives, Ingenico Group North America.