And the growing presence of innovations including QR code payments, AI-driven fraud prevention and PIN on Mobile are set to add value for merchants and customers alike as we head into a key 12 months for the industry.Hits and misses
We’ve seen a surge in adoption of QR code payments such as those offered by Alipay and WeChat Pay. Although the tech is most favoured in China, merchants in tourist-heavy areas have started to offer them to help drive sales and improve the shopping experience. WeChat Pay was offered at this year’s Edinburgh Festival, for example. The burgeoning adoption of alternative finance options at point of sale online is also an interesting trend. PayPal Credit, Klarna and Affirm are at the forefront here, offering new options for retailers to appeal to their customers.
This year we also saw industry standards published for PIN on Mobile
, which could see touchscreen Android devices and consumers’ own smart handsets one day replace traditional card terminals and mPOS. Adoption will likely be slow over the next two years though, as solutions develop, retailers weigh-up their options and consumers decide if they are comfortable with the new way of paying. Much faster will be adoption of AI-powered fraud prevention solutions, using machine learning models to spot unusual activity, reduce losses and improve customer confidence in payments.
It’s worth mentioning at this point that 2018 hasn’t seen the breakaway success of three much-hyped payment technologies. The jury’s still on use of wearables as a payment method, while digital wallets Apple and Google Pay are failing to take off
in a major way just yet. The lack of any credible solutions for retail payments using crypto-currencies has kicked blockchain into the long grass for the time being. However, innovative services such as Ripple and Wyre could yet disrupt the cross-border payments space by utilising blockchain, competing with traditional SWIFT payments.Opening up in 2019
The payments landscape as a whole is shifting before our eyes thanks to regulatory changes which will continue to have a major impact as we head into 2019. The GDPR is already driving much greater transparency and accountability on the part of card data holders and could help to further increase adoption of P2PE and token-based solutions. Even more significant, however, is PSD2 and its Open Banking element, which in 2019 will continue to open-up the playing field for a whole new swathe of fintech innovators.
API-driven services made possible by PSD2 may well offer consumers the choice to pay online not by card but by instant bank transfer. For merchants, this could mean lower payment processing costs. The regulation will also introduce mandatory multi-factor authentication, known as Strong Customer Authentication
, in 2019. Retailers that want to avoid adding extra friction to the customer journey should be considering how their payment partners are going to be helping them address this tricky issue.
Continuing the regulatory theme, the Payment Systems Regulator has launched
a market review of card-acquiring services which may have an impact on the industry this coming year. In the same arena, we’re also starting to see banks get back into acquiring, led by challenger Starling Bank
. This will help increase choice and competition and lower costs for merchants.
Amidst all of this, of course, comes continued Brexit-related uncertainty. With financial centres including Berlin, Stockholm, Paris and Frankfurt already looking to lure talent away, let’s hope there’s a satisfactory resolution that supports London’s continued pre-eminence as Europe’s fintech capital.