This year could be a landmark one for payments, with new product launches and developments of existing technology all in the pipeline.
But for James McDonald, Barclaycard’s Head of Strategic Initiatives and Innovation, the direction of travel is clear. “The big story is mobile,” he says.
It’s an area that’s calling out for change. Entering personal and payment details on a smartphone for an online transaction can be “a bit clunky” – to say the least.
“The mobile payment experience is often an adapted version of the web experience,” says James. “That has to be improved and until recently there wasn’t a widespread way of using a mobile for a face to face retail transaction.”
More mobile solutions becoming mainstream in 2016
Last year saw the introduction of contactless mobile payments in the UK, and James says that he anticipates further mobile solutions emerging too, many of which will allow customers to use their existing debit and credit cards.
2016 will also see increasing use of payments being made directly from bank accounts via consumers’ mobile banking applications. Barclays Pingit is a good example of this and will be incorporated in a broader, industry-wide rollout of the Pay By Bank app from Zapp.
Barclaycard’s bTap is also a new entrant into the market, having launched in mid-January. Customers who download the Barclaycard app can simply tap their Android NFC (Near Field Communication) phones on a card reader to make standard contactless transactions of up to £30.
Contactless NFC to play a bigger role
There has been a lot of work done in mobile payment solutions using contactless , including high-value payments. This is when contactless payments are made using an NFC phone for amounts greater than the standard £30 limit.
The experience is the same as normal contactless payments with the addition of PIN entry or a biometric such as a fingerprint as an extra layer of security. The technology is already being rolled out and James expects most contactless retailers to be able to accept them by the end of 2016.
Consumers using bTap can already make payments of up to £100 at some retailers by entering their PIN.
The retailers’ perspective
There are many factors that retailers consider when it comes to adopting new payment systems, says James. How much will it cost? What level of risk will they have to take on transactions? Will enough people use it to make it worthwhile?
But to be successful, new products need to solve a problem or create a new experience for the customer, James says. The key thing is to work out what they want that experience to be before looking to see which payment solutions best fit.
That can be a tricky question to answer.
“Consumers want a frictionless experience, but some retailers actually want friction,” says James. “They don’t want people to drop out because it’s too much trouble, but they do want to be able to engage with their customers.”
James expects retailers to develop lots more in-app payment experiences. There are existing examples of ways in which these can simplify things – think hailing and paying for a taxi, or paying for parking and extending the time if you need to.
But he also said that there’s likely to be a limit to how many of these people will want to engage with.
“I think we will have an explosion of experiences that retailers will develop, but will consumers want to have all of them on their phone? There will be some sort of consolidation and much competitive activity to deliver the best experiences and secure prime position on people’s mobiles.”
The future landscape
James says that, while he doesn’t expect any one technology to come in and replace all other payment systems in the next five to ten years, he does think that for many people mobile will become the default payment choice.
That’s something for retailers to think carefully about. If consumers are defaulting to mobile the in-store and digital infrastructure around it will need to be there too.
And what about providing fast-charging stations in store? After all, you wouldn’t want to lose a sale because a smartphone is out of juice.