The Invisible Touch

Physical payments are declining at an accelerating pace as consumers adopt a range of more convenient alternatives, from phones to biometrics.

From the use of beads, shells and livestock, through to coins, cheques, credit cards and now contactless and mobile payments – we have witnessed a remarkable shift as payment methods and technologies evolve. On a global level, whilst cash is still clinging on as the most widely used form of payment across the world, its use is declining across every part of the globe. Although the concept of a cashless future remains some way off, cash will imminently be surpassed as the most popular payment method and continue its descent down the ranks.

According to the latest UK Payments Market report, whereas cash accounted for 60% of payments in 2008, this has halved to below 28% in 2018. In a decade’s time, predictions are for this level to fall to below 10%.

Technological advances and the huge rise of e-commerce has changed the way we shop and pay for goods, and the payments sector has been a hotbed of innovation and disruption, with the introduction of contactless payments, fingerprint security and mobile ‘e-wallets’.

Looking forward, what can we expect as consumers? Payment solutions are focused on removing any form of ‘friction’ in the payment process, with retailers looking to capitalise on today’s convenience-obsessed customer. As such, over the coming decade we will see the rise of ‘invisible payments’ become an integral part of society – where payment for a service or product is initiated and processed without us having to action anything (similar to how payment is automatically triggered after an Uber trip). Here, we focus on a few examples of how we will start to see invisible payments impacting our daily lives – in our homes, on the road and on the high street.

The concept is for consumers to enter a store, select their products from the shelves and walk out, bypassing any form of checkout and having the associated payment automatically processed. Facial recognition cameras work together with product sensors and are linked to the respective customer’s pre-authorised digital wallet to automatically deduct the appropriate payment for their shop. It is a new form of connected commerce – enabled by the invisibility of payments. The world’s largest retailers are currently developing and trialling this technology, with perhaps the most famous example being ‘Amazon Go’ stores. Over the coming decade, we can expect such technology to be rolled out across geographies, perhaps even becoming a new shopping norm. “Unexpected item in bagging area” could soon be a frustration of the past!

Automotive producers and payment companies are working closely to deliver integrated payment solutions from the seat of your own car. Consider the ability to require nothing more than your car to effortlessly pay for the likes of parking spaces, petrol, tolls, car taxation, or even drive-through restaurants, autonomously, using the car’s in-vehicle infotainment system with integrated payment capabilities. This is a reality that is not far away. Connectivity like this may also pave the way for smart insurance, where in-built payment technology and connected devices will permit a user to negotiate variable monthly insurance premiums, based on the data collected over the month whilst on the road.

Homes, too, are becoming smarter and more connected. We already have the ability to turn on household appliances such as heating and the oven from our mobile phone. Appliances, however, are moving beyond their primary purpose, to incorporate features that add even more convenience to consumer lifestyles. Fridges, for example, are evolving in such a way whereby cameras can recognise and monitor groceries and send notifications if it detects we are running low on certain goods. They also go further and we can expect fridges to automatically reorder goods for the customer, again with ‘invisible payments’ enabling the transaction seamlessly and effortlessly.

These applications and adoptions of ‘invisible payments’ are designed to entice the customer by delivering an effortless experience, at a time where our homes and belongings are becoming progressively connected. Security, however, as well as convenience remains top priority. The continued roll-out of biometrics and physical recognition technologies, as well as the security of the associated payment networks underlying each transaction, will be central to maintaining the effectiveness and trust of the payments sector. With the application of invisible payments on the horizon, it is an exciting road ahead for retailers, consumers and for the payment solutions and infrastructure that bring them together.

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