A fresh look at seamless payments

All e-tailers want to bring the process of payment as close to their customers as possible. Simple payments are a part of successful tactics. This is an axiom of the same level as these standards: products and services must be of good quality, guarantees must be reliable and service performance must be impeccable. In this article, Bilderlings explores the future of the so-called seamless payments.

Seamless payment services are inconspicuous for buyers and indispensable for sellers. Apple Pay was the first among payment services to make a breakthrough in this area, enabling instant payment by debit and credit cards in online and offline shops to be made using a unique dynamic code for each purchase which is transferred during the transaction instead of the buyer/card holder’s data. It makes payments quicker, easier and more secure. And, most importantly, it fosters customer loyalty and increases sales conversion, since modern consumers are not eager to need to confirm their data every time they make a purchase.

New, discreet and practical

Seamlessness is the main requirement of a modern global economy which is often characterized as an on-demand economy. Such “invisible” payments are becoming more and more widespread in the mobile banking sector, and global corporations are creating payment solutions of their own.

Natalia Zhuravleva, head of the international press service of Yandex.Taxi, told Bilderlings that this kind of payment service became available about five years ago. Today, seamless payments are going through intensive implementation in nine countries where Yandex.Taxi is expanding, including Latvia since spring 2018.

“The opportunity to link your bank card to a mobile app, so that money for the ride can be withdrawn from your account automatically, is, of course, very convenient for passengers and taxi-drivers. You don’t have to wait or to hunt for change: you don’t have to fish the card out of your wallet in order to pay via POS terminal. You don’t even have to take your card with you wherever you go. Using this option you can call a taxi for friends or relatives so that they won’t have to pay themselves. Finally, it has become impossible for drivers to manipulate the payment procedure: if a driver charges a larger sum by mistake, or if the service is bad, it is easy to cancel the transaction or to recover money when you pay via a linked bank card,” – says Natalia.

According to her, payments via linked cards is currently available in almost all countries where the company has a presence, except for Belarus, Uzbekistan and Moldova where the system is expected to be implemented in the near future. Depending on the country and the locals’ habits, the proportion of non-cash payments in the system fluctuates from just a few percent to the majority.

“We see the highest percentage of such payments in Riga. We knew that this type of payment is widespread in Latvia, so the opportunity to link a bank card to mobile app was already available in the country at the starting point of the service operation,” – says Natalia.

The growth in influence of mobile banking in e-commerce directly correlates with the implementation of seamless payments. According to BankNews magazine, more than half of smartphone users in the world today use a mobile banking service, and 82% of financial institutions offer such mobile banking services as transfer of funds, deposits and transaction monitoring.

As Michael Scheibach, executive editor of BankNews, pointed out in his article: Banks are still in the early stages of mobile engagement, though they are adapting well to the changing environment and new financial technologies.

Mobile trends

Todd Thayer, vice president for product management, enterprise and intelligence solutions at Syniverse, notes that customers do not want to think much about accessing information or making transactions through a specific channel. They would prefer to have the same experience irrespective of how they access their account – from a PC, tablet or smartphone.

Financial institutions need to implement a strategy of network interconnection and seamless mobile communications, otherwise they risk losing customers when they become disappointed with the inability of their mobile banking service to keep up with their lifestyle.

Convenience is fundamental in seamless payments’ implementation strategy – and it is the main reason  consumers hesitate over mobile banking. Multifactor authentication and more secure infrastructure are factors in improved account and personal data security.

It is necessary to use secure technology networks to access, transport or aggregate data from other sources which may not use one and the same security measures, says Thayer.

He points out that financial institutions can improve security and simultaneously enhance their mobile strategy by means of a short messaging service which enables consumers to use their mobile devices for monitoring financial accounts, subscription to new services and interaction with two-way text and multimedia messages. In other words, they will follow the practice of all  telecom providers in Europe, Asia and the United States which are remotely connected, or not connected at all, to the banking services sector. The convergence of telecoms and banking industries is a clear trend for 2018.

Security and quickness

Security of mobile transactions performed with credit or debit cards is another important issue. According to The Nilson Report, the number of card transactions in the United States will exceed 150 billion within the next five years. Payment card issuers, merchants and their acquiring banks are already losing billions of dollars to fraud every year. Geolocation options for payments, which are already being implemented by numerous financial institutions, will become more important in the future.

Analysts emphasize that this is just the beginning, and seamless payments will become the next global revolution in the retail industry. For customers it will become more difficult to resist making an impulse purchase, but merchants will be the gainers – just as has happened since 2015, when the spread of contactless payment cards with RFID chips began in Europe, enabling payments via a POS terminal without additional input of a password, and demand in retail market consequently rose.

The intersection of fintech and retail

Several brilliant cryptocurrency startups are worth a mention. Though the fintech sector is not yet attracting mainstream global investment, creativity there is through the roof.

The first startup is Buzcoin, announced in April and represented by its spokesperson Olga Buzova, who is a model, singer, television presenter and, perhaps one of the brightest, out-of-the-box thinkers among Eurasian public personalities. She also has an impressive 12 million Instagram followers.

The second startup is CoinGate, a cryptocurrency payment gateway for 60 of the main world altcoins, which has recently, and quite loudly, entered the retail sector. The gateway enables the withdrawal of alternative money in real-time mode to a bank card with an account in traditional currencies – euro, dollar, ruble, yuan and others. This service has merged with the Paris startup PrestaShop, which offers solutions for e-commerce for nearly 250 thousand online shops in 200 countries.

The point here is that users could add CoinGate to PrestaShop service of seamless payments on their mobile devices, so that they would have the option of instantly withdrawing cryptocurrency to their bank card accounts and paying through the smartphone app for products of more than 80 thousand European retailers. Perhaps this is exactly the long-awaited breakthrough in demand among a wide range of users that Vitalik Buterin from the Etherium Foundation has been expecting for such a long time.

Has the time come?

It is obvious that seamless payments are mostly oriented to mobile devices. As of the current year, 26% of mobile internet users make purchases via smartphones, and 42% of retail sales are linked to mobile devices in one way or another.

To put it another way: if an e-tailer cannot provide the best user experience of his website for all devices, he will lose between one quarter and half of his potential clients. Today, Google Analytics gives higher ranking and promotion to websites with better results of mobile search.

Websites that have not been optimized for mobile devices disappoint and exhaust users: they hamper the purchasing process and lower a brand’s stock. Perhaps it’s high time to revamp your e-commerce service, don’t you think?

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