[December 18, 2018] |
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Worldnet Report: Payment Innovations in 2018 and 2019 Forecast and Trends
The state of payments
is constantly evolving, and this past year has brought several major
trends which will impact the direction of the industry for years to
come. These major developments also point to the trends we anticipate
will be the biggest drivers in payments for 2019.
Whether it's the ongoing refinement of EMV® to quicken
transaction speeds, the continual shift from hardware to software-based
payments infrastructure or the rapid adoption of intelligent retail and
the unattended space, the payments industry is constantly adapting to
consumer demands, regulatory pressures, security concerns and the need
to eliminate inefficiencies from the system.
Looking Back at 2018
Understanding where the industry is going in 2019 requires a quick look
at the major trends of 2018. These include:
Multi-Channel EMV Adoption Requires an Omnichannel Approach to
Payments
The number of options consumers have to make payments has increased
significantly in the past few years. There are the in-person options
using cards (debit, credit and prepaid), mobile wallets, or wearables.
For Card-Not-Present transactions, consumers can opt for P2P payments
(PayPal (News - Alert), Venmo), web-based eCommerce portals, eWallet transactions, ACH
transactions, or eChecks. As retailers and financial institutions have
worked to apply EMV security standards to these channels, the importance
of a true omnichannel payments infrastructure has increased.
True payments omnichannel is more than a consistent consumer interface.
It requires the backend process to be streamlined so that every payment
option used is processed, protected and reconciled in the same fashion.
It should not matter whether the payment is made via a mobile device or
an EMV chip-based debit card. Payments providers are wasting time and
money by patching together disparate solutions to handle every different
payment source.
Shifting Payments Upgrades to an App-Based Software Model
The rapid need for upgrading payments terminals and websites to accept
these different payment options has also put pressure on retailers to
constantly upgrade their payments hardware. Hardware companies have been
significantly reducing prices to entice merchants to buy in order to
keep up with the demands of the backend technology. This has opened a
door for payments software companies that are able to provide software
updates more quickly, helping keep existing hardware systems compliant
and useful longer. The shift to a more software-based upgrade process
also helps retailers avoid the aggravation and expense of constantly
changing their POS system.
The Rise of Unattended Retail
Unattended retail is poised to mke the leap from soft drinks and snacks
to multi-layered and profitable market segment, retailing items like
frozen yogurt, electronics, makeup, school supplies and over-the-counter
medicines. A market report by ResearchAndMarkets.com projects unattended
retail to grow to $34 billion by 2023. An example is the expansion of
products available at large airports, which include small electronics,
travel accessories and jewelry.
Consumers are increasingly accepting of more automation and cashier-less
transactions. According to PYMNTS' October Unattended Retail Tracker,
53% of male British customers prefer self-service checkout lanes, and
16% of all consumers claim the availability of self-checkout is a
driving factor for which grocery stores they shop in.
As unattended retail options expand into higher end products, the
payments infrastructure has adopted to accept credit, debit and
contactless payment options that provide the highest level of security
available to any point of sale. Much like traditional POS hardware is
relying on payments software upgrades to keep up with compliance,
security and EMV requirements, unattended kiosks are working feverishly
to enable the acceptance of all payments without requiring a complex,
time and cost-intensive EMV certification process.
Looking Ahead to 2019
These major trends that began in 2018 will have a lasting impact on the
upcoming direction of the payments industry. There are three areas that
all participants in the payments industry will have to track next year.
The Rise of Intelligent Retail
The growth of unattended retail in 2018 points the way toward the next
evolution of retail. Until recently, little had changed from an
innovation standpoint in the unattended sector, but new technology and
concepts from the AI and IoT spaces has driven the whole sector forward.
As unattended retail outlets have moved upscale, the technology driving
these experiences is also driving a new wave of "intelligent retail." AI
software driving intelligent retail outlets can customize the customer
experience to present stronger purchasing options. For example, an
unattended makeup center can remember a customer's preferences for color
and use photo technologies to suggest new products that would fit their
skin tone and style preferences.
The increasing number of household items connected to the internet also
promises an rapid evolution of intelligent retail. Even something as
simple as a refrigerator can become an intelligent retail outlet if it
uses sensors to automatically order food that is running low and manage
deliveries from nearby retail outlets.
In all of these cases, the aim is not to update the traditional
unattended sector but to drive these solutions into new sectors of the
market where they have not been used before.
EMV Comes to the Gas Pump
As EMV payment options continue to be adopted across all levels of
retail, one industry still faces a major obstacle to reaching
compliance. Gas stations - especially the unattended pumps - face
several unique challenges. First is the major cost of updating pumps,
which can be between $6,000 and $10,000 per pump. Second is the
fractured nature of gas stations, most of which are independently owned
franchises. However, with an Oct. 1, 2020 deadline for EMV compliance,
2019 will be the year many gas stations finally roll out EMV.
Growth of Contactless Payments in the US
Another natural extension of the widespread adoption of mobile wallets
and acceptance of EMV in the US is that contactless cards will be one of
the fastest growing payments channels next year. Visa predicts that 100
million contactless cards will be issued in the US in 2019. Already
widely used in Europe and Asia, consumers on those continents have shown
that consumers will embrace contactless cards, providing benefits for
banks and retailers. Consulting group A.T. Kearney assessed the
transition experience in six U.S.-type markets that rolled out major
contactless programs, and it found that these countries experienced a
20% to 30% lift in the number of payment-card transactions in the three
years following the acceleration of contactless.
So what's next? Now that 2018 is coming to a close, it is time to switch
focus to the opportunities of the New Year. All sectors within the
payments industry will see change, and in order to compete and remain
relevant, they will have to adapt and adjust. Merchants, hardware
providers, processors, payments innovators and financial institutions
will all have to work together to thrive at the end of the decade and
prepare to succeed in the '20s.
About Worldnet TPS Ltd.
Report author Will Byrne is CEO of Worldnet, a leading provider of
provider of cloud management platform for omni-channel payments
solutions to an established base of international corporate clients in
North America and Europe. Worldnet provides Partners with a
fully-hosted, "Payments as a Service" solution, incorporating a range of
pre-certified EMV® applications for POS, mPOS, mobile, tablet and
eCommerce payments.
For more information, visit https://www.worldnettps.com,
email [email protected]
or call (+1) 646-741-2254.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181218005578/en/
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