Innovation in Payments

The payments space has been abuzz with innovations of various kinds over the past few years. While there have been many new ventures seeking to carve out a share of the banks business there has been little sign to date of dramatic shifts in behaviour, with the exception of what seems to be the coming of age of NFC payments.

NFC payments have been headline grabbers for some time now. The card companies and banks have invested heavily in delivering the infrastructure required to enable consumers to transact at stores without actually having to key in a PIN. However, arguably this is more of a further shift away from cash to cards. The real challenge is to deliver value to the participants through new technologies that reshape the interaction between consumers and merchants.

While there has been a steady move towards a cashless society, cards now account for about half of all transactions, the largely untapped opportunity is creating a seamless link between the shopping experience and the payment. Online retailers have led the way in this regard with a steady improvement in the process within a website. There remains an unfilled need to extend that seamlessness across different sites, a challenge not being met by the innovators as they have no compelling reason to do so.

In the bricks and mortar retail sector the opportunity is even greater and less advanced. A combination of different technological offerings, cost of providing the infrastructure and a delayed awareness of the need to embrace change in the store environment have held back the adoption of new processes.

As in other sectors the emergence of Apple’s new payment system, Apple Pay, in combination with iBeacon and the demonstrated preponderance of iOS based mCommerce users may well serve as the firestarter needed to bring together in-store transactions and payment. For many retailers the ability to streamline internal operations by transferring the transaction to the consumer opens the door to a significant revamp of how retailers view their physical assets. We may see the emergence of more showroom stores where consumers have an opportunity to physically review products but order placement and fulfilment are managed through integrated processes.

The arrival of the smartphone as a ubiquitous device, the emergence of tablet based retail solutions and the pressures on physical stores to both attract more consumers and deliver better shopping experiences delivers the basis for a surge in retail innovation. One small Australian company, Salt Technologies, has built a platform which enables consumers and retailers to participate in mobile transactions across locations using secure mobile technology. It allows consumers to browse various retailers shops on a mobile device and place a paid order in a process that can take as little as two clicks.

Author: Peter M. Hall