From the invention of the bank bill to biometrics, the payments industry has been full of surprises and innovation. It has faced many changes and challenges and been impacted by the web, regulations and by the globalisation of the markets.
Vincent Ducrohet, Vice-President in charge of Strategy, Product, Offer Management and Marketing for Ingenico Enterprise Retail, details his vision for mobile payments moving forward, and key developments we have already seen along the way.
Payment Expert: How exponential do you believe mobile commerce will be in future years?
Vincent Ducrohet: The evolution of mobile commerce (mCommerce) is happening at different paces in different regions, so it really depends where specifically you’re talking about. For example, in Africa people are transitioning from cash to mobile payments in a single step, in contrast to Europe where payment trends went from cash to credit cards and then to mobile.
On the whole however, mCommerce has taken a significant upwards turn over the last few years, since the launch of Apple Pay in 2014, and as consumer access to smartphones and ever-faster internet has transformed purchasing habits.
And of course, the most significant driver behind this shift has been greater access to technology, from both consumers’ and merchants’ perspectives. Merchants can now accept all sorts of alternative payment methods (APMs) while maintaining an extremely high standard of security, and with much greater speed and ease than ever before.
Payment Expert: What impact do you believe COVID-19 has had on the impact of mobile payments?
Vincent Ducrohet: As we know, COVID-19 has completely interrupted the payments landscape and forced a sudden shift towards online and mCommerce that was already taking place. However, the current pandemic has accelerated this.
Partly because consumers are using much less cash in response to the virus, and partly because many people have been staying indoors as much as possible, the rate of physical, in-store purchases has dramatically decreased. In turn, people are turning to online and mCommerce more than ever before.
However, the biggest impact COVID-19 has had on mobile payments is by forcing those consumers who were previously hesitant to use digital payments methods to get to grips with them. This has been especially exacerbated by the fact that typically those consumers less willing to use mobile payments have been the older generations, who are in fact those most likely to be isolating. As a result, it has encouraged them to try mobile and eCommerce.
It seems highly unlikely that these consumers will revert back to the payment methods they were using before, once this crisis is over, now that they know the convenience and simplicity mobile payments can bring to their lives.
Payment Expert: What evolutions do you think will have an impact on mobile payments and their growth?
Vincent Ducrohet: Well, consumers have always wanted to buy everything, everywhere in the easiest way. That trend is not going anywhere, and retailers must continue to respond to that. Some already have, but many are still frantically trying to catch up.
However, the most significant evolution to impact mobile payments is likely to be instant payments. In fact, it’s worth nothing that Europe is trying to have its own payment scheme based on instant payments – the Pan European Payment System Initiative (PEPSI).
As well as this, the launch of Amazon marketplace and services such as Uber and Deliveroo – all platforms that have given access to individual sellers and that also allow the sale of competitor products – have changed the course of retail with more seamless, invisible payments that take place on mobile.
These evolutions have played a significant part in smartphones becoming more of a lifestyle product, on which you can do almost anything. So, as consumers become more and more reliant on their mobiles for their daily routine, mobile payments are likely to become even more popular.
Payment Expert: How pivotal have mobile payments been to the survival of the commerce sector?
Vincent Ducrohet: Thanks to the rise of digital payments methods, everything is getting easier for the user and easier for sellers in terms of products and services. However, as everything has moved towards digital forms of payments, we have gone from one payment method worldwide to 300 in 150 countries across the globe. As well as this, anyone can be a product seller on any marketplace.
So, while mobile and other digital payment methods have resulted in greater diversity, and generally sped up and streamlined the entire industry, making commerce accessible from inside people’s homes, merchants now need to find good solutions and good partners to ensure the options they’re providing remain competitive.
Payment Expert: Are there any elevated security obstacles that have come with the growth of mobile payments and if so, how have they been managed?
Vincent Ducrohet: The main obstacle when it comes to mobile payments is finding the right balance between a user experience and security with the least amount of friction.
However, with the Second Payment Services Directive (PSD2) deadline on the horizon, it is allowing new players to offer new services around payment and the flow of payment. This has added more constraints but has also opened the door to innovation and new players.
So, as long as merchants have the right partners on their side to help integrate these security initiatives into the payments experience, they are ensuring payments security for both merchants and consumers across all forms of electronic payments.
For more information on the history of payments, you can download our infographic, developed with Limonetik – Payments Overview Infographic.