February, 2015
By Ryan Briley
The 2015 TAG FinTech Society annual symposium brings together financial technology leaders from Georgia and across the U.S. to discuss emerging challenges and trends within the industry. One keynote topic was the evolution of the commerce experience.
Starbucks, Uber, and Nordstrom span three entirely different industries, but all are considered leaders in payments innovation. These companies are creating integrated commerce experiences, where payment is no longer an independent event for purchasing goods and services. Whether by offloading payment altogether to Uber’s secure platform (i.e., set it and forget it), by earning loyalty rewards while paying for coffee simultaneously, to purchasing shoes while still trying on another pair, all three have found ways to ingrain payment as part of the customer’s overall experience vs. a final step at the end of the transaction.
To further enable this change in how we pay, consumers, merchants, and financial institutions are taking note of the following developments:
- Simplicity is key – So many different forms of alternative payments are hitting the market, but the solutions with staying power are the simplest. Paying with a credit card is easy, and it will take something just as easy to replace it.
- Security – A recent survey of U.S. consumers shows that 1 in 3 have had a reissued card over the past year. New solutions must take steps forward not backward to drive consumer adoption.
- Mobile Payments – 2014 saw many advancements with mobile payments, with the launch of Apple Pay being the most notable, but the evolution is still in its first inning. Current offerings on the market provide a more secure way to pay as well as integrated loyalty with payment. The next generation of offerings allows for creating custom credit/debit products in real time vs. having to onboard an existing product to the platform of choice.
- Point of Sale Evolution – Small merchants continue to look for simple integrated solutions (i.e., a single system for payment, POS, and CRM). They want one number to call for technical support to allow more for customer face time. As a result, more acquisitions are expected in this space as the POS evolution continues.
- Power shift – Financial institutions (namely issuers) have previously held the most power in the payments value chain, but retailers are starting to take the driver’s seat. The mantra of “He who enrolls (the customer) controls” is the new norm. Payment offerings that provide value further upstream will continue to win.
With the rapid pace of more and more devices connecting to the internet every day, integrated commerce experiences will continue to evolve. Companies that are able to find the right mix of technical innovation, mobility, security, and simplicity will drive how we pay for goods and services in the future.
For more on payments, read the article Payments: The Quiet Revolution.