Hold the phone! The future of mobile payments

A close up of a person using their Android device to purchase via pay wave

In light of the latest Android Pay developments, here’s more on the future of mobile payments from Ross Jackson, BNZ’s Head of Cards & Payments.

Recently I read an article captioned “Plastic will be the death of cash” on LinkedIn. That’s partly true, as it’s not plastic that will displace the hassle and costs of securely handling cash, it’s the (16) digits that carry the transaction that are about to change the world of payments for New Zealanders and their favourite retailers.

A recent YouGov study commissioned by Visa (May 2017), showed that 65% of New Zealanders are likely to try out/adopt new ways of paying such as payments on their phone, wearable or other connected device.

That’s not surprising with New Zealand having the highest number of electronic payments per capita, adding up to 1.5 billion electronic card transactions per year, roughly $76 billion in spend. We’ve embraced new ways to pay and plastic has been a hit since it was first introduced to us in the mid 1960s.

The number of new payment accounts on offer is growing rapidly – conservative estimates predict that in three years there will be 21 billion internet-connected devices worldwide. At BNZ, we have been ensuring the right technology and security, such as tokenization, are in place so we can support customers’ new devices and form factors, and give them payment experiences that they love – with the security they expect.

Encountered commerce

From a technology perspective mobile remains at the core of commerce experiences. Smartphones are now ubiquitous, have become the bridge between the physical and online commerce environments, and are driving the expectation of personalisation. Today, 78% of New Zealanders use their smartphones at some point in their purchase journeys, whether to browse and do research, pay for goods and services, or post reviews.

The shift to mobile marks a move from ‘destination commerce’ to ‘encountered commerce’. Instead of having to go somewhere to make a purchase, commerce is meeting buyers in the channels they’re already using, like messenger apps or social networks.

In the encountered commerce world, invisible payments are often an enabler. Amazon Go is the prime example, where customers simply take products off the shelf and walk out. A charge is deducted from their Amazon account and a receipt e-mailed to the app on their phone.

And Uniqlo’s Endless Aisle is another example of the new commerce environment. Uniqlo solves the problem of trying on items with its magic mirror – customers can virtually try on different colours and get them delivered, even if the item is not on shelf. For consumers the benefits are clear: added convenience, friction-free product exploration, and the option to purchase online and have products delivered to their homes later.  Retailers are no longer limited by floor space or inventory.

Connected cars & surfing fridges

And its not just about the handsets or hardware brands people hold today. Shopping is quickly spreading from computers, smartphones and tablets to devices of all shapes and size. Increasingly there will be demand from both consumers and retailers to help people to purchase goods and services at any given time or place, on all sorts of devices.

And that’s happening fast! The ‘Internet of Things’ (IoT), long talked about and often exemplified  by the ‘fridge on the net’,  is becoming an element of low cost, accessible and easy to use home and wearable devices.

According to Gartner there will be 380 million connected cars by 2021 and by 2020 more than half of new business processes and systems will incorporate some element of the Internet of Things.

Connected devices will enable an evolved form of commerce – they will sense their surroundings, analyse them to decide and act – for example, recognising that the laundry detergent has run out and ordering it automatically. With the help of home devices such as Amazon Echo, now for sale overseas, we can all expect to be making payments on devices we use every day by fingerprint, voice or other biometrics in a not too distant future, driving  a cashless – and cardless – society.

Only the beginning

If IoT is connecting commerce, new technologies such as Artificial Intelligence (AI) will make it personal and predictive.  Overseas, AI is enabling eCommerce retailers to better anticipate shoppers’ needs and personalise experiences, meaning they can meet consumer demands more effectively.

Chatbots are popping up on customer service channels across many industries. Independent developers, start-ups, and brands have built more than 40,000 chatbots in the 12 months since Facebook Messenger opened up its platform, so we have hardly seen what chatbots – and their virtual assistant cousins like Alexa and Siri – will be able to do.  In the USA Amazon’s Echo was 2016’s must-have Christmas gift, and marked the point at which AI became officially mainstream.

By simply speaking to Alexa, it’s possible to order an Uber car, update a travel schedule, play music, retrieve video, or order food. The technology is in its infancy, and as more brands are attracted to it, the more functions it will offer.

And for all those fans of the Westworld series… machine learning and the possibilities it brings are just the beginning. It’s exciting because it makes payments easier for everyone – no matter the device they choose.

Roll on 2021 (or maybe its all closer…..)!