The coming years will see many changes in how we use money and make payments. Technology is making possible a world where payments will increasingly be digital, mobile and even borderless. For retailers and businesses of all kinds, this may have major implications for how their companies operate. All entrepreneurs should keep an eye on the future of payments.
Tony Craddock is the director-general of the Emerging Payments Association(EPA). Members include the hot new fintech companies ushering in this new age. Craddock predicts that in the future payments will “cease to exist” from the consumer’s perspective, as technology creates processes so seamless and automated that we won’t need to think about paying. “We will go into a retailer and they will recognise us, either through our face print, voice or thumb print. We’ll pick the goods we need, leave the store and money will leave our accounts. That’s not paying, that’s a pleasure,” he says.
This new age of payments and money does have some major problems to overcome before it reaches anything like this level. Although the emerging world of finance is full of exciting new ideas, inspiring technologies and money-saving apps, for the average consumer it’s just a bit much. “The problem is, everyday people don’t know about this stuff. I talk to my mum about the unbundling of banks and she says she’s happy with her online banking,” says Jamie Campbell, head of experience at financial products platform Bud.
The London-based startup is preparing to launch its banking platform, aimed at helping ordinary consumers access the latest fintech products, in July. Campbell says that, unless consumers are given a convenient and simple way to access the variety of new digital financial products, they will stick with what they have. “We want to deliver a service which is as easy as internet banking and as intuitive as going on your iPhone,” he says. “Creating all these amazing verticals is great, but if you haven’t got a horizontal that covers all of them and makes them usable for the customer, it’s a headache.”
Mobile phones are cited by many as the new cornerstone of banking and payments, and 2015 saw the launch of Apple Pay in the UK and subsequent Android and Samsung versions. This led to many discussions about the “death of plastic”, as it was thought consumers would ditch their credit cards and pay by mobile, instead. However, adoption has, so far, been slow, with just 1% of transactions using Apple Pay, suggesting plastic has some life in it yet.
Entrepreneurs such as Shachar Bialick, founder of London-based fintech startup Curve, are keeping a close eye on the credit card industry. Bialick’s business has launched its own card, along with an app that allows users to sync all their payments into one. Users just select the account via their phones and pay with their “Curve card”. Bialick says there is life in credit cards but change is rapidly approaching.
“People love plastic, they are a great proposition. But my little sister is 16 years old. She has a card, but where is it? In her Apple Pay. Ten years from now, the infrastructure will be there where you can pay everybody with your phone. Plastic will eventually disappear. Cards will still be here, but they will be on your phone,” Bialick predicts.
Old-fashioned cash is still also loved by many, but for some business owners cash is a pain. Alex Wrethman, owner of the Charlotte’s Group restaurant business, decided to make his most recent opening, W5, an entirely cashless affair. “We are entirely cashless, it’s cards and Apple Pay only. There’s no going to the bank. There’s no cash on site which takes about two and a half hours a day to count. We reduced our insurance as we don’t have cash handling and the opportunity for theft is not there,” he says.
Wrethman is passionate about cashless businesses and believes it is the way forward. He also says most customers “don’t care” as most use their cards or Apple Pay regularly anyway and prefer better prices as a result of cuts in administration. “All our book-keeper has to do is watch what’s dropping into the credit card sales and look at the bank account and that’s all he has to reconcile – so it saves him loads of time. There’s no discrepancies in the business and a huge admin cycle has been removed so we can just focus on doing business, taking the money, and looking after the guests,” he says.
But the cashless world of online retail has major problems with both fraud and rejected payments. A recent study by Nilson found that credit card fraud grew faster in 2014 than global e-commerce. Industry is searching for solutions and among those claiming to have the answer is Cardiff-based tech startup myPinPad
The business wants to enable consumers to use their card PIN numbers when buying goods online and says it’s one of the simplest ways to cut fraud. “When chip and pin was rolled out across the UK, face-to-face fraud fell by 69%,” says head of global partnerships Dheeraj Ahluwalia. “We have so many passwords, we forget them, and this leads to basket abandonment, which is bad news for online retailers – but everyone knows their pin.”
Yet for some in the tech space, the internet is insecure for payments and an entirely new approach is required. Blockchain database technology is offering a solution. “We are just piling up duct tape and PVC over a fundamentally impossible-to-secure system,” says Nick Williamson, CEO and co-founder of the blockchain company Credits.
Credits has recently signed a deal with the UK government’s technology provider, Skyscape Cloud Services, to deliver blockchain-as-a-service to the UK public sector. Currently, blockchain is best known as the giant ledger system that records global Bitcoin transactions. However, a host of major banks, investors and governments see its potential as a ledger for all kinds of deals and transactions. The reason they do is that this decentralised, immutable ledger has enormous security benefits and is regarded by many as effectively unhackable. As Williamson says: “The blockchain can potentially cut off entire classes of fraud that have burned us time and time again and created billions of losses to the world economy every year for decades.
First appeared at telegraph