Payment Technology: Where Are We, and What’s Next?
Gone are the days when cash was undisputed king. Today’s payment landscape includes a variety of methods, including the more traditional cash, checks, debit and credit cards as well as relative newcomers like mobile wallets, voice-driven purchases, Bluetooth-enabled payments, and cryptocurrencies. While cash isn’t disappearing anytime soon, it’s the combination of options that consumers appreciate today, using cash typically for lower-value transactions and non-cash payments for higher-value purchases.
Any business that requires a transaction between themselves and another entity (individual or organization) needs to stay in tune with the rapidly evolving payment technologies coming into play. Consumers are looking for fast, easy, secure ways to make purchases or pay for services, and organizations want to enhance customer service, reduce payment fees, offer efficient transactions and reduce liability.
By offering the right mix of payment options, businesses will stay competitive in a fast-paced world driven by digital solutions. Many of these payment technologies are already becoming mainstream (such as mobile wallets and automatic checkouts), but as technology continues to evolve, companies will benefit by offering payment solutions that meet consumers’ needs and preferences.
Technology such as radio-frequency identification (RFID) tagging, mobile payments, and mobile-accessible loyalty programs have stores and restaurants making checkout a breeze. Many retailers are now implementing kiosks or equipping employees with mobile checkout systems that allow customers to check out anywhere in the store on their own or with an associate — without standing in line. That’s one of the simplest solutions. But then there are stores and restaurants that are getting even savvier with their payment technology.
Sam’s Club is one example of a store enabling automatic checkout with their proprietary mobile app, Scan & Go. It enables in-store shoppers to scan the barcode of a product, put it in the cart, pay within the app and walk out — without the need to stand in line to check out. Panasonic and Trial Company are experimenting with taking it a step further by adding RFID tags to each product, which is then scanned as customers walk through a checkout lane and automatically charged to the customer. Amazon Go is another example of this technology taking off.
Giving the customer full autonomy, retailers are starting to use pickup lockers or towers where customers can have a full omnichannel experience by placing orders online, then picking up and skipping the lines at stores using automated locker systems.
RFID, BLE, and NFC payments
Speaking of RFID, it’s one of several technologies that are enabling automatic checkout and advanced payment solutions. Bluetooth Low Energy (BLE) and Near Field Communication (NFC) are similar technologies to RFID in that they all use radio frequencies to read, collect data, and monitor objects. They have varying read-distances; for example, for NFC, the object and reader need to be very close to each other — the “tap and pay” technology — while RFID can read at a greater distance, and BLE can read at an even greater distance. BLE tags (or BLE beacons) are the more energy-efficient version of RFID.
RFID, NFC and BLE beacons are being used for payments in several ways. RFID wristbands can be worn at events, on cruises or at theme parks and used to pay for items using preloaded cash amounts. NFC and BLE beacons enable easily, contactless payments for items from a mobile device.
Mobile wallets are exactly what they sound like: apps on mobile devices that store credit or debit information and are used to pay for goods and services. Major mobile wallets include Apple Pay, Google Pay, and Samsung Pay. There are also mobile wallets associated with banks, as well as ones tied to individual merchants (like PayPal or Starbucks).
This type of payment technology is increasing in popularity because of its convenience and security. A consumer can store all of their credit and debit card info in one place, have multiple mobile wallets on one device, and never have to take out a physical card or cash — paying for everything with their smartphone. The information is encrypted, and devices are typically passcode or fingerprint protected, offering several levels of security.
Beyond the security measure of fingerprint access to mobile devices, biometrics are used in payment technology both on smartphones and, soon, in-store at the POS through finger-scanning devices. Credit card providers such as Visa are piloting fingerprint authentication on physical cards, and some mobile devices are now equipped with voice, retinal and face recognition technology.
These biometric features create unique identification and authentication for mobile payment systems as well as enhanced POS technology to make payments faster and more secure, no matter how a consumer chooses to shop — online, in-store or via a complete omnichannel experience.
Internet of Things (IoT)
We live in a time when people can ask their refrigerator to buy milk and have it delivered to their home without ever taking out their wallet. Seriously. IoT is a network of connected devices that can access the Internet and service providers and can be used for anything from playing your favorite music to taking notes to making payments and purchases.
Consumers can already order and pay for movies and music through smart devices like tablets and TVs, but that’s just scratching the surface. The possibilities for retail are endless. Stores can equip a mirror in a dressing room with the capability for a customer to purchase the item they’re trying on immediately and even wear it out of the store, without waiting in line. A diner can use their smartwatch to pay for their meal, tip their server and leave without waiting for the bill to come. A driver can pay a bill on their car’s dashboard (while safely in park, of course).
OK Google, pay my phone bill. Alexa, reorder my last takeout meal. Hey Siri, send Frank $20 for his birthday. These capabilities are all made possible by voice-activated virtual assistants — and Samsung is poised to join Google, Amazon, Apple, and Microsoft (Cortana) with its new Bixby system. Despite the fact that making payments and purchases via voice assistants hasn’t completely caught on yet, it is starting to take root and is positioned to be a strong player in the future payment technology landscape.
Why Diversify Payment Options?
As people rely more and more on technology for their everyday interactions and tasks, they’re looking for convenience and security. Evolving payment technologies enable customers to shop, make purchases and pay bills in whichever way is most convenient or comfortable for them, giving them the best option for a superior customer experience. And happy customers become loyal customers.
Furthermore, staying up-to-date with the types of payment solutions available will simplify things for retailers. Repeated, efficient transactions reduce friction and spur more sales. Smart devices and omnichannel shopping experiences lessen return shipping rates and transaction fees. And best of all, implementing advanced payment technology can help to keep a business PCI compliant and mitigate liability for organizations that experience a data breach, as there are often multiple authentication levels and encryptions in place. Finally, implementing this type of technology and securities removes the merchant from the liability of a breach because a third-party processor would absorb that liability.
Ready to learn more about payment technology and the solutions available to you? Our retail team is ready to help. Contact us to learn how we can implement a solution specific to your retail environment and goals.