Trends and innovation in the payments business are having a significant impact on Commerce in general and eCommerce obviously. These trends are influencing accordingly the marketing, sales and development work connected. The Merchant Payments Ecosystem (MPE) in Berlin is one of the best places to learn about new developments and trends in the payments space. Simply to be prepared and already able to do some headwork for the changes to come. In Berlin we had three days filled with interesting sessions and the opportunity to interact with like-minded people from around the Globe.
This year we could feel some stronger focus on customer experience and security. Which makes sense in a way with new innovation and regulations put into effect lately. At the end of the pipeline the users must feel comfortable and trust in using things.
Here are some key takeaways from the 2019 MPE edition:
Trust is the currency of commerce
Consumers often take an easy decision if they are willed to trust a physical store or not. Mostly this decision is based on the products but also influenced by the shop’s image of course. Raising the question what is building trust in the internet, things can get a little bit more complicated. Most consumers are aware of the power of Photoshop and how product photos are tweaked and manipulated to push towards a positive buying decision. We know that. We are more cautious about what and where to buy in the internet and the influence that sellers are trying to take on us.
Considering now how we are dealing with data, we’ll get a different picture. If anyone asking us inside a brick a mortar store for our personal details, most us are not very pleased to share them at all. While in the internet we tend to be more willing sharing a lot of data. Just think about all that giveaways and freebies you can get anywhere across the web.
Looking on the numbers though, in the internet there is 10 times more fraud than in physical stores. Destroying trust.
Regarding payments the majority of us trust in Credit Cards and Contactless Payments as there is a relatively low risk. While again, the internet contains high risk.
To me personally, that’s scary, thinking how we’re shifting almost anything towards the internet.
Trust always had been the currency of commerce. We are buying from the person or company we trust. We are attending the event of our trust and so on. The consequence being that security is a top subject within the payments in the internet.
So how to overcome the challenge of creating more trust within the internet?
That’s the big data and data collection comes in. More data creates more trust on B2B side, by knowing better who we are dealing with, and so lowers the challenge to risk transaction acceptance. And we’re already facing several solutions to make it easier to identify users, like through biometrics and behavioral characteristics. But this also comes with a number of challenges, showing up bycustomer concerns, what is actually happening with their data. These concerns supposed to be taken away from the consumers and to be covered by regulations as PSD2 , also including 3D Secure and Strong Customer Authentication (SCA), which was one of the most frequented topics during the MPE.
Looking into the future the industry might achieve a win-win situation for all participants. No fraud, no friction and no declines, would result in happy customers, merchants and industry. Mastercard had a good and promising closing statement on this topic: “We will take this challenge and solve it, trust us.”
GenZ has potential
Talking about consumers and trust. GenZ is approaching things with less trust in general, no matter what it is about. Grown up with all the devices, apps and tech around makes GenZ not only masters in using the tech and the internet. But also immensely cautious. And this generation has a very good understanding of what retailers can do with their data. Which is not a bad thing. GenZ is more open to all the tech and innovations than any other generation. But they are much harder to please. And that doesn’t apply for eCommerce merchants only. The industry needs to think well and work hard to please these users. Besides values like usability, cross channel functionality, there is a very high expectation in having literally everything instantly and then it also must run seamless. However, it’s worth the efforts as GenZ offers a large potential in terms of revenue.
Payments must be kind
Undoubtably the use of cash is constantly falling on a global level. Payments has taken over and cash is no longer king. But what does it mean for payments? Following the presentation of Silvia Mensdorff, Europe GM of ACI, “Payments has to become kinder”.
Not only on the level that customers love to be treaten individual, they are expecting a unique customized user experience in best case. Sometimes it is the small things that count. Like the question what will happen to the pennies, cents and small coins. Depending on which country we’re looking at, we are still not fully covering coin based business models like the DIY car wash or even getting your supermarket trolley with an cashless option. Solutions might be available in terms of technology, but the internet is not everywhere.
Going a step further, personally I’d always gave my small leftover cents to those charity collection boxes at the (physical) checkout and sometimes to bugglers. Since I’m using my mobile phone for payments with preference, I stopped doing that. Following the presentation I realized I’m not the only one and the subject has some impact indeed.
Thinking big, some larger organized charity organizations collecting millions through received pennies and coins, might be facing significant losses until their implementing digital payments.
What will we do about the pennies?
Looking on the tipping systems of Starbucks or Uber for instance, we can clearly see options. These are not really applying for charity yet but surely offering opportunities for some innovative idea and tech creators.
Biometrics and fraud
Biometrics is one of the hot buzz words currently. Already we are experiencing some promising and handy solutions in action. Starting with the fingerprint and facial recognition, to behavioral recognition. Enabling us to login to accounts without noticing the process. Considering the amount of accounts and all the different passwords most users have to deal with, it’s just great to have one single solution to get access to any of your accounts. There’s giant potential in it.
But the risk for fraud is high because it’s so easy to spoof most of the systems. Within the presentations we’ve seen few examples how easy it can be to bypass or hack the mechanisms. And the risks for fraud goes beyond biometrics of course. How VPN is opening doors to lever out geo restrictions had been just one other example mentioned. Criminals are taking advantage of the situation.
To prevent fraud the technology and rules are present, but are different in each country. So as soon as things are shifting cross border, it’s getting complicated due to missing common regulations. We need more regulation on the internet itself to overcome these challenges.
And bear on mind that the fraudsters are not after your credit cards, they’re after your data in general. In case of stolen credit card data you can block the card and will receive a new one. In case of stolen personal data, it’s taken without the chance for getting back your privacy. You can’t replace a stolen birth date by a new one.
So it is not surprising to hear the word spreading: “Data is the new oil.”
Cryptocurrencies & blockchain
Since cryptocurrencies and blockhain made it into the public mind, it was a good time to put a spotlight on how things work out in the reality of business and daily life. Within the panel discussion there was a common sense on the huge potential, it also became clear that we are miles away from suitability for daily use.
Robert Wiecko, COO at Dash, took position pro the usability by pointing out he bought his plane tickets with Bitcoin. David Birch challenged back with the question what would happen in case the airline goes bankrupt. While credit card and bank transfer users can hope for retransfer, Bitcoin users most probably get nothing. The reason is simple – there are no regulations so far.
Benjamin Kirschbaum, cryptocurrency approved tax advisor and lawyer, wrapped it up in straight words as well: “Accounting with Bitcoin is hell and messy.” Although possible.
We believe regulation will come to the crypto space, because in the end of the day we all want regulated business. And then this business will take off.
Summary and conclusions
The picture is pretty clear. It’s all about the customers and the experience they’re making. Winning their trust. Securing them and our businesses. Having innovative technology in the background. These are just the cornerstones.
People expect more. When shopping in brick and mortar stores, we don’t like waiting in lines. Having lunch with friends in a restaurant, I’d love to do split payments easily. If I’m buying a polo shirt during my US business trip, I’d love to enjoy an easy return process in the local shop in Poland or anywhere else in the world. But mostly that is simply not possible.
If your commercial business wants to be competitive, you need to generate an emotional and seamless experience – before, during and still after the the purchase. People love to be taken care of and expect so. Your relation with the client should not end with the purchase, it should be a starting point. Shifting thoughts away from payments, there’s a high potential for doing good branding work here as well.
Having the understanding and plenty good solutions available, we are still missing universal regulations to overcome cross border friction. Even Europe is still a very fragmented market.
What will happen in the near future on the customer side? One thing we can answer with confidence – the people will tend to use that what is the easiest way of doing a payment. Which is leading me back to one of my favorite slogans: The best payment experience, is no experience.
The industry will have to create more convenience and generate trust amongst consumers. In that sense the final discussion panel closed the MPE with a fitting sentence: