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Without a doubt, 2017 has been another momentous year for payments. In the UK, we’ve seen bitcoin soar to record values, and we’ve celebrated two significant birthdays: firstly, our beloved contactless cards turned 10 and secondly, we rejoiced 50 years of using ATMs. Most people can barely remember, or have never known, not having ATMs, or even contactless cards, and it’s a good reminder of how much consumer behaviours have moved on in the payments sector over the decades.
Now, as we look forward to 2018, it’s well worth reflecting on some of the notable foundations that have been laid this year - I’m convinced they further pave the way for more evolution of the sector in 2018.
For me, there were three very notable consumer trends to pay attention to in 2017:
Alternative payments have grown exponentially
One of the key trends we’ve seen this year has been the rapid adoption of alternative payments. According to some recent research we’ve conducted (Lost in Transaction whitepaper, Oct 2017), we know that 89% of consumers are now using mobile wallets on a more regular basis than they were two years ago, while a surprisingly high 11% of consumers have experimented with the use of cryptocurrencies. With this new wave of innovative ways to pay, in which consumers and businesses alike are becoming more accustomed, the industry has been posed with a dilemma: security vs convenience?
There’s a mismatch between consumers and merchants on the dreaded fraud issue
Our research shows the fraud awareness has continued to grow in 2017 which is illustrated by the 52% of UK consumers who told us they considered fraud as an inevitable part of online shopping. Unfortunately, we’re also seeing a mismatch between consumer and merchant perceptions of how to handle the issue. 36% of merchants fear increasing fraud prevention measures will weaken the customer experience and therefore cause consumers to abandon transactions, in reality, 56% of consumers tell us they’re willing to accept heightened security measures to eliminate fraud. Going forward, the industry will need to address this divide.
The role of Big Data has been more fully recognised
As online payment adoption accelerates and new payments methods are introduced, merchants are becoming more aware of the pivotal role that data optimisation and deploying analytics tools has in enhancing both security processes as well as the overall customer experience, whether that’s identifying vulnerabilities or sticking points in the customer journey or expanding omnichannel capabilities securely.
So, as we approach the close of 2017 and look ahead to 2018, I think we will see more of the same as far as these three notable trends are concerned.
We can hope to see greater alignment between consumer and merchant attitudes to fraud, especially as new forms of fraud develop. In this emerging landscape, an expectation will be placed on merchants to gain consumer trust with more effective security measures. For example, we’re likely to observe a proliferation in more effective and diverse two-factor and three-factor authentication methods, a shift technology companies like Apple are laying the foundations for as they begin to roll-out mainstream biometric authentication methods.
We’ll also continue to see more steady growth in alternative payments. In my opinion, the use of cryptocurrency is likely to take two to three years before it becomes mainstream but it’ll certainly continue to evolve further next year and more and more people will experiment with it.
In 2018, the most successful merchants will be those who identify and embrace the plethora of opportunities that exist in the payments landscape and deploy Big Data to improve their processes. The customer continues to be king, and has more places to shop and more payment methods than ever before. Building their complete trust and creating the right customer experience will involve having the most robust payments strategy possible.
One thing for certain is that nothing stands still in this ever-evolving sector and 2018 promises to be another exciting year…