March 20, 2019
Imagine a future where you walk into a store, pick out the items you want to buy, put them in your shopping cart, and then just walk out of the store when you are done – no billing counters queues and no checkouts. This can be made possible by an array of technology innovations such as sensors, beacons, IoT devices, and a lot of innovative software. Interestingly, the future is already here, at least in some places – Amazon Go and Alibaba are already offering this experience.
Let’s go back a little bit. The first wave of digital commerce began with digital and mobile wallets such as Apple Pay and Samsung Pay, which allowed users to make payments using a mobile phone or a device. But the user has to initiate the transaction and complete a couple of steps.
The second wave started when Uber introduced invisible payments to its app. It became evident that the most convenient payment system is one where a consumer doesn’t even have to do anything. As long as the payment process is secure and the amount is correct, no one really likes to punch in those credit card numbers (CNP) or PINs (CP). Hence the ability to provide seamless transactions is fast becoming a norm. For instance, at Wagamama, a restaurant chain in the UK, after customers are done with their meal, they no longer need to wait for the bill – they can simply walk out of the restaurant and the bill will be settled seamlessly. The restaurant has rolled out the Wagamamago app which lets customers pay and tip within the app directly thereby eliminating the checkout process completely.
The third wave of digital commerce is connected commerce, which is about harnessing the intelligence of IoT devices and sensors to complete purchases. Whether it is a car, a refrigerator or a smartwatch, the payment can be initiated and completed by a sensor/machine with little or no intervention by the user. Therefore, the third wave is called the ‘invisible payments wave.’ Amazon Go is a great example wherein you enter the store, grab the products, and leave without any checkout. E-commerce giant Alibaba has also launched a cashier-less, brick-and-mortar store that uses facial recognition to identify shoppers who simply take what they want and walk out the door.
This third wave of connected commerce enabled by invisible payments is vital for all brands that want to add more convenience to the daily life of a consumer. For instance, when Samsung announced its smart refrigerator, customers were fascinated and curious to explore its unique features. The refrigerator’s built-in cameras help in monitoring the items stored in the fridge via an app on the smartphone and send notifications when the customer is due for grocery shopping.
Smart refrigerators enable grocery shopping through a touchscreen feature; customers can effortlessly make the payment transaction for the order and have it delivered at the doorstep. Companies need to use consumer insight and design effective product roadmaps by incorporating consumer feedback to deliver an enhanced shopping experience.
To make invisible payments a reality, creating an omnichannel environment for end-users will be essential. Technologies such as AI, machine learning, sensors/IoT tech, and security solutions like tokenization as well as biometrics will need to be championed. Connected commerce will thrive in the IoT world and would benefit from the following:
Sensor collecting data from devices and recognizing consumer needs
Based on the data gathered, find the most suitable product
Trigger payment transactions with minimal or no user intervention
Leading companies will also focus on building and maintaining consumer trust. As payment apps graduate from merely processing transactions to making decisions about what to pay for, consumers need to feel confident that their digital identity is secure. They also need to be sure that their private data is safe and protected beyond their banking logins and credit card numbers. Payment companies like Mastercard® have been working relentlessly towards ensuring a safer, more secure and smooth experience for consumers. In this vein, it’s interesting to take a look at NuData Security, a Mastercard company that helps businesses identify users based on their online interactions and stops all forms of domestic fraud. It tracks how individuals type, the manner in which they tap on their smartphone screens, the speed at which they move their mouse pointers and considers several other physical traits.
We understand consumers’ desire for enhanced security in payments without having to compromise on ease and comfort. At Mastercard, we are making more concerted efforts in Asia to strengthen the digital payment ecosystems by speeding up the adoption of secure technologies that can effectively guard against fraud in an increasingly connected world. We are using our data and analytic services to help companies better understand today’s consumer to improve their businesses. said Rama Sridhar, Mastercard’s Executive Vice President of Digital and Emerging Partnerships and New Payment Flows in Asia-Pacific.
NuData harnesses the power of behavioral and biometric analysis, enabling its clients to identify the human behind the device accurately, analyzing over 400 billion events annually. NuData’s products are used by some of the biggest brands in the world to prevent fraud while offering a great customer experience.
The ever-growing emphasis on simplifying consumers’ buying experience will continue to spur innovation in payments. Companies will increasingly realize the imperative of moving payments to the background and consumer experience to the foreground. The future of payments is in powering connected commerce – and it’s invisible.