Posted by Alison Arthur on 06 Jun 2018
The payments landscape is multifaceted, comprising everything from new technology like digital payments and artificial intelligence, to the old standbys of plastic payment cards and cash. Here’s a short list of some noteworthy headlines we’ve seen in the payments ecosystem to help keep you informed.
The most successful payments app is…
Apple Pay is touting payments via Face ID, Google Pay is deepening its relationship with PayPal, and Samsung Pay is offering cash back. But none of these payments apps have been able to overtake Starbucks as the leader in mobile payments. According to new research from eMarketer, an estimated 23.4 million people (ages 14+) will use the Starbucks app to pay for an in-person sale at least once every six months in 2018. The report estimates that approximately 22.0 million people will use Apple Pay, 11.1 million will use Google Pay, and 9.9 million will use Samsung Pay over the same period.
Why the high usage of the Starbucks app compared to these other solutions? The Starbucks app has enjoyed success by tying its customers’ payments to the chain’s loyalty program. As customers use the Starbucks app to pay for their purchases, they can also accumulate stars and cash them in for rewards. Another factor is that the Starbucks app can be used regardless of device while the other payments apps typically come pre-installed on the associated mobile hardware. This means that the Starbucks app can be device agnostic and be adopted by a large population no matter what hardware they choose.
Cash isn’t dead…yet
For years we’ve been hearing about the move towards a cashless society, spurred by everything from digital payments to bitcoin. Millennials and emerging economies are two forces leading us toward a future that’s less dependent on paper bills and coins, and more dependent on technology to make purchases. Is cash as we know it nearing its end?
Not so fast, says Sri Shivananda, senior vice president and chief technology officer at PayPal. In a recent interview with CNBC, Mr. Shivananda explained that the chief competition for digital payments is good old-fashioned cash. Why? Because while cash might seem like an antiquated way to pay, it does offer security, privacy, and reliability that are top of mind in this era of payments fraud and data misuse. But that doesn’t mean that digital payments and cash can’t coexist going forward. Read the full article.
Chatbots become more supportive
Artificial intelligence (AI) is the bedrock of chatbot technology that makes everyday tasks like booking appointments, hailing rides, and making payments easier than ever (think Facebook Messenger, Amazon Alexa, and Google Home). As chatbots become more commonplace in our lives, the market is poised for tremendous growth. Grand View Research predicts that the global chatbot market will reach $1.25 billion by 2025. And Gartner estimates that by 2020, 85% of customer interactions will be handled by chatbots.
In the face of this enormous growth, what’s next? Advancements in AI are powering intuitive chatbots that can handle customer service requests more seamlessly than ever. These interactions can speed up queries and potentially solve problems before employees become involved, saving businesses time and money. Voice recognition technology is also becoming more refined to detect nuances in people’s voices, including frustration and agitation.
The good (and bad) news about online commerce
The good news? Online commerce continues to grow at a record pace. According to the US Census Bureau, ecommerce sales reached a record high of $453.5 billion in 2017. This figure represents a 16.4% increase over 2016.
The bad news? While EMV chip cards have done their part in reducing fraud at the point-of-sale, more of that fraud is moving online. A recent study published by Javelin reports that online commerce fraud is now 81% more likely than fraud at the point-of-sale. This is the largest discrepancy ever reported by the company.
Cash might not be dead, but what about credit card signatures?
You may have noticed that fewer merchants are requiring a signature to complete payment card transactions at the point-of-sale. That’s because, in April 2018, the four major card brands – American Express, Discover, Mastercard, and Visa – relaxed their signature policies. There are many factors driving this change, one of the most important being the speed and convenience with which customers will be able to complete their transactions by not having to provide a signature.
Thanks to a combination of widespread issuance of EMV chip cards, the continued popularity of PIN-based transactions, and the emergence of biometrics to authenticate card purchases, signatures have become less effective at preventing fraud than they once were. While signatures might still be required at certain merchants and/or for specific transactions, consumers will be signing much less often than they used to.