From QR codes and voice-activated payments to Internet of Things devices that make payments, this year’s payment innovators are pushing the boundaries.
With cash and checks in decline, a trend that the coronavirus pandemic is likely to accelerate, the world of payments is abuzz with imaginative ideas for making payments invisible.
Payments is one of the most rapidly evolving areas of transaction banking. With the velocity of money increasing as countries implement real-time payment systems, and new non-bank providers leveraging technologies such as blockchain, APIs and QR codes, customers don’t even need to think about making a payment these days, it just happens. In the consumer space, payments are becoming contextual; embedded within WhatsApp and everyday applications we use. Having to launch a dedicated payment application on your desktop computer or mobile device, is increasingly becoming a thing of the past.
Contactless payments are mushrooming, stoked by fears around handling cash in the current pandemic, and by broader industry trends such as the growth in online commerce. The growing use of contactless payments in countries like the Netherlands, Hungary, Poland and the Czech Republic, could see those economies transition to a truly cashless society, much sooner than anyone anticipated. In the Czech Repblic, for example, more than 90% of transactions are contactless, according to a study published in May by Merchant Machine. And in Hungary, where more than 80% of transactions are contactless, more than 44% of citizens want to go cashless. “The way we make payments has been evolving over the past decade, but amids the Covid-19 situation, cash usage has declined even further,” says Ian Wright, founder of Merchant Machine. In countries like the Netherlands, where there is a high rate of ownership of debit cards (99%), only 23% of people want to go cashless, but that may well change in the next few months as cash more or less disappears from everyday transactions.
New payment intsruments are also emerging as a result of Open Banking and regulatory efforts to create more flexible payment mechanisms that allow people to pay when they can, instead of the money being automatically debited from their account. Request To Pay in the UK gives the payee more control over how and when they pay for a service. They can pay the full amount, part of it, or even decline to pay.
The fourth industrial revolution that we are now hurtling toward at breakneck speed–spurred on by the coronavirus, which has forced many of us to go digital–will give rise to the Internet of Things, where payments are triggered automatically by connected networks of smart devices. Digital workers or bots are disbursing small-business loans in a matter of seconds, much faster than what it would take a traditional bank or human, and banks are opening payment accounts for bots as well as humans.
This year’s most innovative payments providers include US-based financial software provider Fiserv, which teamed up with ExxonMobil in January to enable drivers with Amazon Alexa-enabled vehicles, Echo Auto and other Alexa mobility devices to say, “Alexa, pay for gas,” when they pull up to the pump at more than 11,500 gas stations across the country. Talk about fortuitous. The hands-free payment solution neatly bridges the gap between the digital world and bricks-and-mortar commerce and is likely to prove popular in an era of social distancing.
Fiserv is also enabling merchants to embrace a new era of noncash payments using contactless chip-and-PIN credit cards. According to Fiserv, more than 23 million micromerchants in Europe lack terminals to accept these forms of payment. Its solution enables merchants of any size to accept chip-and-PIN credit cards without any additional hardware, a separate card reader or a PIN-entry device.
ING’s FINN Banking of Things was born from the “crazy” idea to let devices make actual payments, according to ING. The second release of the software at the beginning of last year enabled micropayments from smart devices to be queued in the FINN platform and eventually settled via payment-processor Payvision.
In Taiwan, Taishin Bank is helping merchants make sense of the various digital payment methods on offer via its Pay+ solution, which reduces the application development time frame. Merchants can choose from credit card, account link deduction, points exchange and an electronic voucher system.
Safer, More Efficient, Less Cash
Emerging and less-developed markets are leapfrogging the West by taking advantage of innovative payment technologies like QR codes. Mexico’s new marketwide digital payment platform, Cobro Digital (CoDi), which launched last September, uses smartphones and QR codes to reduce use of cash and drive electronic payments adoption. Citibanamex, alongside other Mexican banks and the Bank of Mexico, developed CoDi in just nine months.
In Pakistan, Telenor Micro-finance Bank (TMB) claims its Easypaisa mobile app has revolutionized the mobile money landscape. The app allows users of all telecom providers to recharge their mobile balance and access TMB’s banking services. Users can deposit funds in their Easypaisa Wallet from any bank.
Abu Dhabi Commercial Bank’s recently improved Mobile Token allows users of its ProCash corporate online banking app to log on and approve transactions more quickly and securely. It also leverages QR code scanning for faster approvals, and biometric authentication for quicker access.
Blockchain is making its way onto the playing field as well. ImagineBC, a collaborative project that launched in October 2018, allows members to earn money from their personal data, creativity and time. Its revenue-sharing model compensates all parties within the ecosystem using smart contracts. The system is based on Ethereum’s private blockchain, running inside the Microsoft Azure cloud. Community members interact with one another via a mobile app.
Other payment solutions honored this year are less about shiny new tech, however, and more about innovations around the fringes of existing business processes and applications.
Intesa Sanpaolo’s Integrated B2P (business-to-person) solution allows different payment types—multichannel transfers, Bancomat Pay, checks B2P—to be transmitted via a single payment flow. The bank says the service was created out of a need to make the payment process safer and more efficient by combining traditional payment instruments such as multichannel transfers and checks with digital instruments.
Payments Network, offered by Kyriba, a treasury management software-as-a-service provider, helps CFOs to address the growing threat of payments fraud, centralize payments and unlock organizational efficiency. Payments automation, paired with machine learning, provides an additional level of detection, says Kyriba, by scanning a company’s payment history and screening for unusual payment behaviors. Payments Network is part of Kyriba’s active liquidity platform.
“CFOs no longer have to piece together solutions from third-party vendors, but rather rely on one platform to provide real-time monetary updates,” the company says. “They are now literally able to mediate a crisis, pandemic or everyday cash management with the click of a button.”
Payments Innovators 2020
|Abu Dhabi Commercial Bank||ADCB Mobile Token|
|Citibanamex||QR digital payments project|
|Fiserv||Connected commerce from Fiserv: “Alexa, Pay for Gas” PIN on mobile payments from Fiserv|
|ImagineBC||Closed-loop ecosystem undergirded by leading technology (BC/AI/ML), which allows consumers to monetize their personal data|
|ING||FINN Banking of Things|
|Intesa Sanpaolo||Integrated B2P solution|
|Kyriba||Kyriba Payments Network|
|Telenor Microfinance Bank||Easypaisa App|