Payment services have been pretty straightforward for a pretty long time. Even the mainstreaming of online shopping required little more than adding an e-commerce channel to a payment system already managing several other payment types.
But anyone hoping that the current wave of innovation in payments will be accommodated in much the same way is doomed to disappointment – and probably a rapid drop off in profits.
‘Now’ is the era of omni-channel payments that are continuously evolving and blurring the lines between previously separate payment channels.
In this world, we see:
- Consumers who have already embraced contactless cards, mobile payment apps and online wallets.
- Shoppers flitting between online and in-store purchases, embracing self-service check-outs and Click and Collect.
- Developers trialling NFC stickers and contactless wearables, QR codes and Bluetooth Low Energy (BLE).
- Invisible payments, conversational commerce, and in-car payments becoming the next big talking points in mature markets.
- Phones replacing cards as payment devices – before eventually being replaced by payment types that are completely independent of form.
This is a global phenomenon. China leads the way on social apps with mobile payment wallets, for example, while the US market becomes ever more fragmented as FinTechs disrupt a market already transformed by payment services from Amazon, Google, Apple and the rest.
Forrester and McKinsey tell us that a ‘customer payment journey’ that begins in a digital channel doesn’t always stay there. In fact, according to Forrester, European consumers are embracing true omni-channel payments in ever-greater numbers:
- In 2015, the total value of payments that began in a digital channel but were completed offline was €457 billion.
- In 2020, the total value of payments initiated in a digital channel but completed in a physical one will be €704 billion.
- And, just to emphasise the point, by 2020, the total number of online and omni-channel transactions will account for 53% of all European retail sales.
We are at the tipping point that many in the payments industry have been predicting for some time. And now that it is here, it is unstoppable. The more genteel pace of development during which e-commerce was incorporated into existing systems is very much a thing of the past. The genie is out of the lamp – and it isn’t going back.
Which creates a challenge for merchants, acquirers and processors. They need the technology of now to manage this omni-channel world, but don’t want to be stuck with the technology of yesterday when it too is out-paced. Because when we talk about the technology of now, we cannot avoid talking about the technology of next – whatever that may be.
One of the reasons e-commerce didn’t disrupt the existing payments infrastructure too much was because that disruption – ripping out legacy platforms and starting again with something more agile and flexible – was so terrifying. Wait-and-see turned into as good a risk management mechanism as any.
That’s a luxury the industry no longer has. But when it comes to managing payment fragmentation, Open Payment Platforms now provide an alternative to rip-and-replace. They are the bridge between now and next, able to support businesses with a clear digital strategy. Because one thing we can say about the tomorrow’s payments industry is that it will be vastly different from today’s.
Email me email@example.com – Sales and Marketing, RS2 to arrange a call to discuss how we can help your business navigate payments.
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