The payments space is so hot right now.
Innovation is underway across the entire payments value chain. Even non-payments players such as tech giants are launching a big push into the payments space. Web next-gen is here and payments tech is racing to keep up. The Internet of Things (IoT) is well and truly here with an exponential number of devices slated to enter the payments value chain. For example, you can bet your bottom dollar that in the near future, your fridge will play your fave tunes from Spotify and order and pay for your grocery. The future is close and there’s plenty more exciting advancements to come.
The market and the consumer have responded to this innovation with equal enthusiasm. Consumers are welcoming digital payments, with uptake being extremely strong, particularly in Australia. The steep decline of cash payments and the upsurge in non-cash payments couldn’t be any clearer.
There’s a lot happening in the payments space – and fast. Here’s our top 5 picks for emerging trends that we believe will make waves in 2017 and beyond.
Mobile is not going anywhere
Smartphones are ubiquitous and it was just a matter of time before mCommerce would become prevalent.
Regardless of the sentiment around the technology, compared to the rest of the world, Australia businesses have been a little slow in adopting mCommerce. This represents a significant opportunity for those businesses that are on the front foot – and a clarion call for those ignoring it. PayPal’s MCommerce Index shows that while 71 per cent of Australian consumers use mobile devices for payments, 49 per cent of business websites are not mobile optimised. A clear mobile strategy needs to align and integrate with your e-Commerce strategy.
Move over desktop shoppers, in 2017 we’re betting that mobile conversions will become the new norm. There are a few things to keep in mind, though. Perfecting the user experience for your customers should be top priority! Remember, mobile is a cross-platform device, allowing ‘showrooming’ in brick and mortar stores and checkout on the go. To ensure you’re getting conversions on mobile, the whole buying and checkout experience needs to be frictionless. The trick is to ensure that the experience transfers seamlessly across devices and channels. For example, consumers should be able to shop on one device and complete checkout in another.
Innovation at the Interface
The point-of-sale (POS) is also experiencing a sea-change. Checkouts are becoming progressively more intelligent as is evident with the innovations in contactless payments and near field communications (NFC). What this has allowed tech companies to do is insert themselves into the payments value chain. On the back of these technologies, tech giants have launched digital wallets such as Apple Pay, Android Pay and Samsung Pay where you can pay with just a wave at the check-out, no need to carry cards or cash.
There’s more, though. Technology is moving from the palm to the wrist. Smartwatches and other wearables are emerging as the new contender for smartphones. NFC, radio frequency identification (RFID) and quick response (QR) codes and barcodes are making wearable payment systems possible on the front-end and point of sale (POS) terminals and backend payment processing infrastructure are rapidly catching up.
Thanks to the ubiquitousness of contactless technology such as tap-and-go, Australia is one of the frontrunners when it comes to embracing contactless wristbands and other wearables for payments. This is one trend that is not going to fizzle anytime soon.
Why Blockchain Is Going To Be The Next Big Bet
Perhaps the most revolutionary of all innovations in the payments space and a topic that has been making news headlines recently is Blockchain. Whilst still early days, Blockchain seems to have some obvious use cases in real-time payments, regulation and the Internet of Things.
Blockchain uses a distributed ledger system that requires any change in monetary value or ownership to be verified by an entire community instead of a trusted third party. The way it works is a secure, digital ledger of transactions is created and distributed amongst a network of computers. Multiple, individual participants can add to the ledger without going through a central authority.
It is touted that Australia is best placed to emerge as a leader in Blockchain adoption. The fact that Australia’s capital markets are fairly centralised and its financial institutions have come out the other side of the GFC relatively unscathed provide a fertile ground for adoption and utility of this technology. What also works in Australia’s favour is that our payment infrastructure will be reaching end of life pretty soon, opening up the possibility for betting on tech like Blockchain.
Blockchain has immense potential applications in online identity management, smart contracts, centralised payments and safer cross-border payments.
FinTech and RegTech Take Centrestage
FinTech is the term used to describe novel or innovative technological advancements in the financial services arena, such as core banking, insurance or payments, that can potentially disrupt existing financial systems. The sheer magnitude of the Australian FinTech market inspires awe. It is estimated to be worth approximately US$1.1billion, with investment in this space contributing to US$300 million in the past 12 months.
While FinTech is redefining how customers experience core parts of banking and payments, another technology is quietly emerging in the background. RegTech chiefly interests banks and financial institutions and affects regulations and compliance in order to keep up with the giant leaps occurring in the FinTech space.
RegTech serves to modernise and automate processes around compliance and financial regulations, including real-time compliance data collection, large-scale analysis of compliance risk and monitoring and auto-generation of reports. In simple terms, this technology is set to help risk mitigation, improve fraud protection and manage customer identity. Other benefits of RegTech lie in the reduction of compliance costs and improving profitability, as a result.
Omnichannel – Breaking the Barrier between Physical and Online
This is the year we expect Omnichannel to change from buzzword to best practice. Businesses recognise that while consumers can interact with them on one channel, they can convert on an entirely different one. Technological advancements in Wi-Fi, smartphones and m-Commerce is changing the way people shop, and businesses are responding by bridging the physical and online marketplaces. Case in point is click-and-collect service where consumers can purchase online and either collect in-store or get it delivered.
Omnichannel is not reserved for retail alone. Social networks are contributing to B2B and B2C sales across a vast range of industries and is fast turning into profitable lead-gen platforms for businesses. Social selling tools such as LinkedIn Sales Navigator are making it possible for businesses to find and engage with new prospects.
Payments are going the omnichannel route, too. Businesses are wising up to the fact that it’s no longer enough to restrict e-Commerce to only one type of payment. The more payment options that online retailers offer to shoppers, the higher their chances of conversion. Cash, cheque and bank transfer are out, and alternative payment options such as recurring payments are in. Cross-channel integration is helping unlock productivity gains by syncing payments with inventory, accounting and CRM software. Tokenisation is helping reduce friction in the checkout process. Cardholder data storage is secured through the tokenisation process so that future purchases across channels are made quick and simple for the consumer.
Tremendous and rapid change is the order of the day. These trends are not the first and they won’t be the last, but keeping an eye on what’s headed our way can help businesses stay ahead of the curve.
Make waves this 2017 with eWAY. We’re recognised within the industry as a market leader in providing technical innovation, a robust infrastructure and best-in-class customer support. Get started today with Australia and New Zealand’s leading payment gateway. Call us on 1800 10 65 65, enquire online or sign-up for free today.