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As we step foot into a new decade, Mastercard’s Mike Cowen explores the top trends emerging in the world of digital payments and e-commerce.
E-commerce and digital payments are fields that have been advancing at a rapid pace over the last few years. And now that we’ve entered into a new decade, it’s vital to keep preparing for what’s to come.
Here, Mastercard’s head of digital payments in the UK and Ireland, Mike Cowen, gives his predictions for the top 10 trends that are set to have an impact on the sector this year:
Mastercard’s Mike Cowen. Image: Sam Frost
1. Making payments as easy as ABC
2019 has seen a massive shift to new interfaces enabling consumers to shop, live, and pay without the need to pick up a mobile phone or other device in order to do so.
With voice shopping set to hit $40bn by 2022, the need to adapt payments for these channels has risen. One example is the introduction of audio idents – in 2019, Mastercard launched its own sonic brand as way for customers to be reassured that their payment is secured by Mastercard even in a voice-only interaction.
2. Pay as you live
2020 will see the expansion of payments via the channels people already use every day. Increasingly, the channels we use most will be used to make payments, for example sending money to social media and messaging contacts will become as easy as sending a photo or video clip is today.
3. Putting an end to password rage
Throughout 2020 we’ll see a steady improvement in the way that issuers authenticate cardholders for online payments with more and more offering authentication by fingerprint or facial recognition on your mobile phone. This not only improves security but also removes friction, enhancing the overall customer experience.
4. Streamlining the online checkout
Historically, the different elements of the online payment process such as card selection, confirmation and authentication have all been quite separate, resulting sometimes in a fractured payment experience. This started to change a few years ago through ‘tokenised’ digital wallets such as Apple Pay, Google Pay and Samsung Pay.
In 2020, we will see the next phase of this trend with many large merchants replacing all of their stored cards-on-file with secure tokens.
5. The online world gets its own ‘chip and pin’
We’ll also see the last piece of the ‘tokenisation puzzle’ start to fall into place with a programme for the industry roll-out of the Secure Remote Commerce (SRC) standard. SRC allows us to completely rethink the online checkout by removing the need to manually type card details and replacing the card number with a token.
Much as the roll-out of chip and PIN slashed in-store fraud, SRC can do the same for e‑commerce while at the same time improving the online payment experience.
6. The end of manual card entry
Under SRC, rather than having to type a 16-digit card number, the cardholder simply selects the image of the card they want to use. Already live in the US, the UK will be one of the next markets to benefit from this wholesale upgrade of the online payment experience.
7. Knowing me, knowing you
Increasingly, consumers want to feel valued and recognised as individuals. Advances in technology such as artificial intelligence (AI) will help us to do this by making personalisation much smarter and more accurate, allowing service providers to offer customers an individually relevant experience.
8. It pays to pay
The average UK consumer participates in 14 loyalty programmes but only presents a loyalty card for 20pc of qualifying transactions. Often the limiting factor is simply the number of cards that a person would have to carry.
While it has been possible for several years for consumers to store their loyalty cards digitally in their mobile phones this has not significantly changed the situation – perhaps in part because many point-of-sale scanners are not able to read a barcode from the screen of a mobile phone.
In 2020, we will see the emergence of new loyalty propositions that release the consumer’s desire to participate from the ‘tyranny of the loyalty card’ helping consumers to maximise their recognition and retailers to improve their return on investment.
9. Delivering peace of mind
Consumers increasingly need peace of mind not only regarding their money, but also as regards to their data. This becomes even more relevant as the range of services that a consumer can access via their bank becomes much broader through initiatives such as PSD2 and Open Banking.
In 2020, in addition to permitting third-party requests to access their data, we will see the emergence of digital identity services which allow a consumer to prove their identity electronically without the inconvenience of having to produce their passport or driving licence and utility bills.
10. The next frontier for the mobile banking app
The mobile banking app will play an increasingly important role not only in the authorisation of payments, but also in providing the means to control access to one’s personal and financial data.
This will contribute to a growth in the popularity of account-based payments, with services such as Mastercard’s Pay by Bank app appealing in particular to consumers who want the control of being able to manage every payment through their mobile banking app.
By Mike Cowen
Mike Cowen is head of digital payments and labs at Mastercard UK, Ireland, Nordics and Baltics.
