The process of digitising the payments industry is well underway and what we see at PCM, from a news perspective, is that we are in an unprecedented period of change for the industry.
“We believe the pace of change taking place in the payments industry is going to increase as digital technology continues to advance,” says E-bai Koo, senior vice president, global network business, American Express. “While the number of digital payment options is growing, we believe it is too early to determine whether any one platform or form factor will win out. Customers adopt new technologies when they meet their current needs better than how they are being met today.”
Contactless payments are growing strongly and NFC technology will be one of the drivers of digital payments at point of sale (POS). The Smart Payments Association reports that around 40 percent of chip cards shipped in 2014 included contactless functionality. Meanwhile on the acceptance side, 9.5 million NFC-capable terminals were shipped globally in 2014. This represented a 33 percent increase on 2013, bringing the worldwide installed base to 21.4 million units, according to Swedish research firm Berg Insight.
With Apple Pay and Samsung Pay live in many markets, digital wallets are firmly back on the payments agenda. “There are a lot of digital wallets out there — some of the local schemes are looking at this — but we are starting to see some consolidation,” comments John Berns, managing partner at payments consultants Accourt.
“The revised EU Directive on payment services (PSD2) may well lower the entry barriers even further to new entrants in the space, which could interest the internet giants. After all, iTunes is a stored value mechanism, so it’ll be interesting to see how Apple, Google and Amazon compete in the wallet wars.”
What does the future of digital payments look like?
The future will be more omni-channel, namely using all sales channels interchangeably to serve the customer. More ‘click-and-collect’ and ‘endless aisles’ propositions are expected as merchants consolidate their back-end systems. However, just as service will become more channel agnostic, it will also become more device agnostic as customers expect to transact from any device, anytime, anywhere. The future is increasingly digital, which means a greater take-up of digital payment methods.
These methods include automated clearing house (ACH) payments, which are expected to rise in prominence, particularly with the global movement towards immediate or real-time payments. Real-time settlement on the back-end is key to this because it minimises risk for everyone. The merchant receives faster settlement. The consumer sees the transaction immediately and is able to support, approve and challenge it as appropriate.
The digital future is about scale, partnerships and speed-to-market. Advancements in digital technology have opened up opportunities for companies of all sizes to get into the payment business, and to grow scale almost overnight.
As such, PCM’s annual Buyers Guide seeks to keep the reader as up to date with the companies at the prominent end of servicing the industry.