The card payments space is continuously changing, with new technology, improved security and customer experience innovations all impacting the way customers make payments. But what changes do we foresee for the year ahead?
Generation Z, which is used to describe those born at the dawn of the century, has already started to change the payment ecosystem. A recent study by Accenture, Driving the future of payments, has shed some light on just how different this generation is, even from millennials.
One of the hallmarks of Generation Z’s financial identity is the use of digital wallets on their smartphones, a tool that completely removes the need for physical cards. According to Juniper Research, 1.6 billion consumers already use digital wallets, and this figure will grow to more than 2 billion in 2019. Contactless payments will also continue to grow over the next year.
Rather than presenting a challenge, these new payment behaviours can potentially help to solve one of the most enduring problems many businesses currently face: a lack of cash flow. By accepting these instant payment types, firms can improve the speed and regularity of cash coming into the business and boost their ability to invest in growth.
Given the level of innovation and the number of new products and services in the ‘digital’ payments space, security professionals are having to work hard to keep up. Fraudsters are becoming increasingly sophisticated, so security frameworks must evolve, adapt and deliver too.
One security innovation that we expect to see more of in 2019 is the use of geolocation data to compare the location of a device that‘s being used to complete a transaction with the stated location of the cardholder. A number of providers are also expected to introduce acoustic analysis into their call centre interactions. That will analyse background noise during inbound calls to try and determine the true location of a caller.
Another security measure we expect to see much more of in 2019 is a process called ‘tokenisation’, which replaces payment card data with secure, randomly generated tokens. There will also be an increased reliance on biometric authentication in place of the static passwords many providers currently rely on.
Even with the most secure payment system, providers still have to make sure all the information they hold is confidential and discrete. At London & Zurich, security is our number one priority. We segregate service user numbers (SUNs) and funds to make sure your business is doubly protected from any unauthorised access, and our services come with several other security measures to ensure your payments are in safe hands.
Enhanced customer experiences and rewards
With the card payment industry becoming increasingly competitive, customer experience has started to become the primary differentiator. There are clear signs that payments have moved beyond the transaction and now customers are ready for more. Accenture’s survey found that 70% of millennial and generation Z consumers are interested in receiving payment advice and expense management services that’ll give them a better understanding of their personal spending.
In recent years, there has also been a dramatic rise in the value of rewards being given to consumers. As an example, company data from one firm revealed that marketing and reward costs had more than doubled between 2008 to 2016, from 9% to 20% of revenue.
In 2019, consumers will expect more rewards than ever before. Firms are now exploring ways to broaden the relevance and reach of rewards to steal customers away from their rivals. This will lead to the introduction of more experience-based rewards that reflect consumers’ lifestyles and are delivered in real time.
Alternative payments, wearables and connected e-commerce have been growing significantly over the past couple of years and this is a trend we expect to continue in 2019. A survey of banking industry professionals found that two-thirds believe wearable payment technology will be the next big innovation, with an increase in functionality and a reduction in price expected to drive up sales over the next year.
Another area where we expect to see significant growth is in voice purchases. Voice assistants have become an important part of many households; more and more people have standalone, voice-activated speakers such as Amazon Echo, while most modern smartphones now feature a voice assistant of some kind. As a result, we expect to see a dramatic increase in the number of people who use this technology to make purchases on a daily basis.
In the UK, independent white label payment gateway provider Cardstream has partnered with Mastercard, giving customers access to Mastercard’s latest digital payment innovations, the Secure Remote Commerce (SRC)-ready Masterpass V7 wallet and ‘Pay by Bank app’. The app will allow customers to securely pay for goods and services online using their banking app, streamlining the payment process for customers and retailers alike.
Tomorrow’s payment solution, today
It looks like an exciting year for card payments, and London & Zurich will continue to be one of the driving forces in the industry. Read more about our card payment services or get in touch to find out how we can help boost your sales and cash flow in 2019.