The idea of merging or eliminating, one of the worlds oldest “technologies”, cash, to one of the worlds newest technologies, the smartphone, is super intriguing. But, beyond that, looking into the merging role of cash into any ubiquitous device is even more exhilarating.
Let’s look at facts when it comes to payments:
- There are 1.3 billion active credit cards and debit cards accounts according to First Data research
- Out of 7.3 billion active phones, around 2 billion phones are considered smartphones
- The forecasts show that 50 billion connected devices will reach the market by 2020
- And, 90% of cars are expected to be connected, too
And lets talk about including ourselves as “things” and what that will do to the market. Big enough to peak your interest? I certainly have my eyes all over it.
What does this mean for payments?
Clearly, the first market to see traction and have big input into what the future players will look like is clearly mobile payments on smartphones.
Brick-and-mortar stores are under threat from all angles. If I owned a retail store I would be stressing experience, because if there isn’t that, then what is there? From a payments perspective, the in-store checkout experience is increasingly incompatible to pretty much all aspects of the modern digital world we all live in. For example, 86 percent of consumers avoid stores with long queues, and frustration with waiting in line costs retailers billions in revenue each year.
Through the immigration social "inclusion-ist "in me, I go and look at markets that have high rates of an unbanked population or people without access to conduct business due to the lack of physical infrastructure to do so.
What is the advantage?
Well, as an example Sub-Saharan Africa has a 25% banking penetration but has seen 60% of mobile penetration into the market. What does this mean? It means they can conduct business, connect to outside merchants, use technology to become connected, and perform the fundamental value of cash: the ability to exchange something of value for something else.
Here’s an example of one of the other countries I look to often. We are living in a digital era, yet half of the U.K. small businesses only accept cash, even though the U.K. has one of the most advanced contactless infrastructures in the world, over 50% of UK adults carry less than £5 in cash and 54 percent of Europeans paid using a mobile device in 2016. Seems strange? Inadequate and old school!
Retailers are also leaving money on the table by not taking advantage of this connected world.
As a data geek, I always look at what the data opportunity is behind this.
Allowing things to be connected for payments, has also set unprecedented access to consumers and their data by the sheer fact that they are connected. The data created on patterns, times, geolocation and other factors if used through a mobile/online channel enables retailers, merchants and others to understand the consumer in a way that has never been done before. This allow for the ability to develop targeted and relevant content, and make the world of marketing a massive data source.
And, yes, some perhaps most tech giants and retailers are currently taking advantage and using our data to sell to us. Do you see this as deceiving and unprecedented? I sure think so.
I firmly believe and hope for a world that the opposite can occur. How can we use all this data ourselves as consumers? How can we now, because of mobile payments, enable easy frictionless experiences and better buying decision making? How can we instead of ending up with 6 new pairs of shoes a month, use this connected world to budget better and make real life decisions that connect the new payment methods to my existing financing world, and say, “Hey Bianca, want the apartment or this shoe? Because if you keep going, the shoe closet might end up homeless.”
So, what about the 54% of those who want to adopted mobile payments?
Despite the fact that consumers use their mobile devices more than their PCs, desktops account for 85% of online spending. In addition, 23% of users abandon mobile applications after only one use, and a staggering 86% have abandoned a mobile basket due to the frustration of a lengthy checkout experience. Even more concerning is that only 4% of small retailers even offer a mobile application that accepts payments.
What is the solution to this friction?
Mobile payments bring up a huge security concern. As mentioned in one of my previous articles,many retailers and merchants are taking action to distinguish between mobile and desktop spending, sometimes even creating separate fraud prevention practices, as 7 out of 10 merchants believe it’s necessary.
I see a path where persistent verification of identity can become a threat or impediment for mobile payments to be processed. Checkouts have become so annoying to ensure that you are who you say you are. There needs to be a balance between security and convenience for identity verification and consumer ability.
What gives me hope?
Well. the fact that organizations like EMVCo say that we will enable consumers to safely and conveniently use on-device authenticators, such as a fingerprint or other biometrics to securely verify their presence when making an in-app payment. With the infrastructure in place, this could be the solution for ubiquitous devices to actually just be a larger growing trend to pay attention to.
This article published on blog.bioconnect.com