Next Wave of Payment Evolution: Choice

Michal Christine Escobar
Senior Editor (Hotels)
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Payments have transformed from a simple exchange of currency to the facilitator of more secure and seamless shopping, buying and traveling experiences, industry executives shared last week at Secure Technology Alliance’s 12th Annual Payments Summit. The Summit, held jointly with the U.S. Payments Forum Member Meeting, brings together industry experts looking to find new ways to overcome challenges impacting the adoption, security and usability of emerging and developing payments technologies.

Contactless payments: the next wave of EMV chip migration

With inserting an EMV chip card now the new normal for consumers, the next phase of the U.S. payments evolution is all about creating streamlined and elevated checkout experiences for consumers. Contactless payment is one method that is gaining traction in the U.S.

Dan Sanford of Visa told attendees that the industry is migrating to contactless, citing that 78 of top 100 merchants are now accepting contactless payments and 60 percent of Visa transactions take place at contactless-enabled merchants (as of January 2019). The next step is getting contactless cards and devices into the hands of consumers shopping at these locations. That is also progressing, according to Visa, with 100 million cards expected to be in market by year-end.

The critical third step, echoed by several presenters at the Summit, is educating the consumer and ensuring that signage and other materials properly convey if and where they can tap to pay. Once a consumer taps once or twice, they will quickly start doing it every single time, Sanford told attendees.

The “customer first” path for transit

According to Sanford and other presenters at the Summit, transit will be a likely driver for contactless payment adoption in the U.S. Large transit agencies are moving to open contactless payments, including recently-announced MTA. Global experience shows that transit has driven adoption for contactless payments in the geographical area around the agency.

But contactless payment is only one technology that transit agencies are looking at to create better multimodal experiences for their riders. Transit agencies speaking at the event including those from Los Angeles, Dallas and the Bay Area told attendees about various projects to enable more choice and seamless mobility for their customers in their respective areas. This includes real-time trip planning, mobile ticketing, rewards, account loading choice and partnerships with ridesharing and other services. In the end, it’s about providing the customer with the most benefit, according to the agencies.

Pay your way: merchants gravitating towards alternative checkout options

“Choice” is also a keyword that merchants outside of transit are focusing on. Executives representing major retail and restaurant brands told attendees about their tactics for providing omnichannel experiences to their customers. According to these merchants, it is all about increasing choice for the customer and allowing them to pay where and how they want.

Tactics include contactless payments for some, and other alternative checkout options like QR code-based mobile wallets, mobile order ahead or buy online/pick up in store (BOPIS), in-app payment with loyalty integration, in-store kiosks, mobile point of sale (mPOS), curbside checkout and more. The most critical pieces of implementing any new checkout option, according to the brands speaking at the Summit, is that the technology works consistently, and it reduces friction in the customers’ experiences.

Behind the scenes: security critical to consumer experience

Security is critical to every payment experience whether online or in-store but cannot disrupt the transaction flow or present friction to the consumer, speakers shared at the Summit. Speakers said that EMV chip technology is effective at pushing counterfeit card fraud out of the system, but it’s a never-ending attack cycle as fraudsters constantly seek new fraud avenues. Over the course of the three-day Summit, attendees received in-depth information on many fraud prevention techniques including tokenization, point-to-point encryption, device fingerprinting, machine learning and AI, and standards efforts such as EMV 3-D Secure (3DS), EMV Secure Remote Commerce (SRC) and FIDO that can work together to better authenticate users and secure online transactions without disrupting the customer.