With more than one in three UK adults now registered for some kind of mobile payments service according to UK finance, experts predict we’re going to see growing numbers of transactions through the mobile channel – with knock-on implications for security, settlement and other aspects of payments.
When it comes to transaction execution and security, it’s likely we’ll see a shift away from “pay by face” and thumbprint recognition via mobile device used as a single factor towards a combination of these factors with secure tokens stored on mobile devices (or in wallets) that enable “tap to pay.”
Tap to pay solutions enable consumers to tap their mobile phone against either a POS reader or another mobile device to confirm payment – and can also be used as a factor to confirm the presence of a user in e-commerce and other card-not-present (CNP) transactions.
Discover, the US-based card company, predict the tap-to-pay market will grow more than 23% next year to reach $76.3 billion globally.
Richard Carter, founder of Lopay, expects to see huge adoption of “tap to pay” technologies across the spectrum.
“For consumers, the ease of paying for things by just tapping their phone onto a merchant’s phone makes the appeal of tap-to-pay obvious. We’ll also see a big shift among businesses, for whom tap-to-pay removes the need for cash, cards, card readers or tills, reducing their costs and streamlining the sales process.
Tap to pay will also bring more cash businesses into the digital era, since anyone can accept contactless payments, wherever they are, via mobile device.”
Loyalty, rewards and digital wallets
Expect to see more kinds of organisation offer digital payment wallets – and for these wallets to offer a wider range of reward and loyalty schemes to attract consumers to use them.
Examples include supermarket wallets that feature instant rewards, either through cash or loyalty points, and the transfer of more traditional loyalty schemes – such as airline points programmes – away from traditional credit and debit cards and towards a wallet scheme managed by the airline.
“Instant cash rewards, points and gamification of rewards will shift from cards to wallets this year.”
The trend towards gamification to encourage usage – in which users are offered extra rewards at particular times or to reward certain shopping habits – also looks set to continue.
At present, Western Europe has the second-smallest digital wallet market in the world – but this will change in the year ahead.
Hyper-personalisation through AI
As we argue elsewhere, we are agnostic about the benefits of Artificial Intelligence (AI) here at Payments Cards & Mobile, believing that its benefits depend on the context.
Be that as it may, independent experts have tagged the ability to interpret customer usage and payment patterns to predict their future needs through AI as a major trend for the year ahead.
Tommaso Jacopo Ulissi, Head of Strategy, Transformation and Capital Allocation at Nexi, says: “From 2024, Artificial Intelligence (AI) will become more integrated into business processes, allowing companies to leverage data analytics and build value-add services autonomously.
AI will also integrate more deeply into the payment mix, using generative capabilities to create hyper-personalised solutions that will enhance the shopper experience, while assessing the risk profile of every purchase in real time and reducing the number of cumbersome checks.”
Traditional high-street banks which have struggled to keep pace with the fully digital technologies and savvy marketing techniques of digital-first challengers and fintechs are most likely to look to adopt automated data analytics this year as they seek to regain advantage and innovate to retain customers who are increasingly beginning to drift towards their competitors.
As the “neobanks” and fintechs respond with AI-led products of their own, the battle for dominance and share of wallet should make a fascinating spectacle.
Pass the popcorn…
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