It’s been a decade since the iPhone launch opened the floodgates for smartphones. By 2012, smart phones accounted for over 50 percent of all US mobile phones and that rate climbed to over 80 percent last year. Businesses have spent much of that decade inventing new ways for customers to engage and ultimately pay via all those phones.Now that the marketplace focus has moved from wallets, purses and cash to digital and mobile payment, the next transition is already in sight: Payments are ready to jump from cards and phones into the environment around us, integrated into jewelry, refrigerators or the sensor-rich doorway of an Amazon Go store.
More dollars for donuts.
Businesses that lean into the expanding universe of mobile payment will be the first to capture new kinds of market share. Just to stay with smartphone-based examples, look how Uber has come from nowhere to become a cultural and economic force, in part with frictionless payment integrated into the app. And now another mobility business, route-finder Waze, is adding order-ahead functionality for Dunkin’ Donuts that will let drivers buy their coffee and donuts faster and more conveniently on their commute. It’s an m-commerce win that creates new business for both enterprises.What is the next step? As those examples show, integration is a driving characteristic of the payments industry. Every change until now has made the consumer experience more seamless, more convenient and less time-consuming. Doing so has made the merchant experience more rewarding by putting the relationship rather than the transaction in the forefront, focusing the consumer on the product or service and increasing their engagement.
Next steps: Chips, sensors, software.
What new levels of engagement will be possible when the payment moment is just a matter of waving a ring or taking a selfie for facial recognition? Those are some of the innovations on display at TRANSACT, the annual trade show of the Electronic Transactions Association (ETA) May 10-12.Fintech demos will show where the industry is moving, making it possible with embedded chips and software to pay with sunglasses, your home refrigerator or on the table-top of a Cheesecake Factory. Some of the methods use phone apps, like one that can pay at a vending machine or another that covers subway fares. Others are harnessing the new world of sensors and connected devices to do the work around us, like the Amazon Go grocery store that monitors what you take off the shelf and then charges for it as you walk out the door without going through a check-out lineWhat all these innovations have in common is the evolution from card and POS machine to a new model for payment systems. The model going forward is technology-enabled, software-led distribution that allows integrated payments with more fluidity and less friction. The physical devices will vary, and can even be switched out more easily than older, capital-intensive machines. The software heart will be the common denominator.
Lowering barriers to sales.
Increasingly, consumers are rewarding integration between their digital and commercial experiences. What I take away every year from TRANSACT is the sheer endless possibilities that businesses have for connecting with those consumers, in ways that promise to disrupt existing markets and open new ones. The lesson for merchants is a crucial one: Payments are not an afterthought but a key part of the experience they offer. A full 70 percent of US consumer spending is done electronically, meaning that businesses with less friction in that transaction are better equipped to acquire and retain customers. The question growing businesses should be asking is no longer “How do you want to pay?” but “How can we make this easier?”