Banks and other financial service providers have a great deal to gain from offering secure mobile payments to consumers eager for no-fuss solutions. Several trends are shaping the design and development of mobile payment solutions today, all aiming to attract increasingly demanding and tech-savvy consumers. What are these trends, and how will they change the payments landscape?
To begin with, there’s a difficult journey underway as the traditional payments paradigm is replaced by a fully tokenised system. Tokenisation can be used to secure any kind of digital transaction by reducing the amount of sensitive data stored on mobile devices, and transmitted over networks during payment. The technology substitutes a payment card’s static credentials (the card number and expiration date) with a unique value that only applies to a single transaction. This token is of no value to fraudsters, because they cannot use it again. New as well as established players, including leading consumer products providers like Samsung and Apple (with Samsung and Apple Pay), are looking for smart ways to leverage tokenisation.
As consumers’ expectations change, so must the environment they choose to spend their money in. E-commerce giant Amazon is already beginning to pilot a new concept – Amazon Go – which aims to eliminate physical checkout lines. The company’s new brick-and-mortar grocery store requires shoppers to scan their smartphones on entry, after which its “just walk out” technology registers which products are taken off (or put back on) the shelves, thereby keeping track of each shopper’s virtual cart. The shopper simply leaves the store when they have everything they need, and the system automatically charges their account.
Lastly, the fact that mobile ecosystems are bursting into life everywhere will also influence payments products. It’s no longer just about an app store linked to a particular mobile operating system. Apple has shown the world that digital dominance is achieved by offering a range of compelling products and services through a self-contained and secure platform shared with other organisations. As the ecosystem trend develops, institutions in the financial industry will need to consider very carefully what ecosystems to support – and how they will do so. The key to getting it right is identifying where and how their customers are interacting digitally.
The time is now for financial service providers to act to reinvent their payment offerings in order to stay at the forefront of innovation. Mobile payment platforms are constantly changing, as consumers expect almost everything to fit into their increasingly digital lifestyle. Only by innovating will more traditional financial players be able to appeal to the digital generation.
Frans Labuschagne is country manager for UK and Ireland at Entersekt, a fintech provider of mobile-based authentication and app security software protecting online and mobile banking, e-commerce transactions.