The Art of the Invisible Payment

Let’s all be honest with each other. We don’t really want to think about how we make a payment, we want to concentrate on the experience we are about to have. When I go to a concert, I don’t want to spend time thinking about how to pay for that ticket or where to pick it up. I just want to show up and enjoy the music. That’s because the experience is what’s most important.

The same holds true in how we conduct our daily lives. Who wants to worry about buying more laundry detergent or eggs, especially when I can get them delivered straight to my door with just a quick press of a button? Payments and the transaction are quickly transitioning away from the focus as the consumer experience as it takes center stage.

You can’t overlook invisible payments

Invisible payments are quickly becoming mainstream, with a variety of approaches designed to make paying invisible and effortless:

• Disney MagicBands: Instead of park entry tickets, FastPasses, hotel room keys and credit cards, Disney guests wear these wrist bands, scanning them against a touch point to complete transactions.
• PaidEasy: Integrated with iBeacons, the app opens a “check” as diners enter a restaurant or bar and is synced with the retailer’s POS. The server adds items to the bill that are paid out in-app. Customers can view their tab at any point and split, tip and pay the bill without waiting.
• Amazon Go: The “Just Walk Out” shopping experience uses the Amazon Go app to enable shoppers to skip the hassle of standing in a checkout line.
• Alexa: Alexa has been enabling consumers to order thousands of products from Amazon by simply asking. Now, Capital One is partnering with Amazon to enable voice-activated payment of credit card bills, with plans to extend bill payment to other areas such as mortgage payments.
• Connected cars: Connected cars are expected to bring new meaning to mobile payments, allowing consumers’ cars to communicate with toll booths, gas pumps and POS systems at places like your morning coffee drive-thru.
• What will the transformation to invisible mean?
• Looking forward, I believe that disruption will certainly continue, if not escalate. For one thing, plastic credit cards will be alien to the young, or at least a distant memory associated with their parents’ wallets. Remember the bag phones of the 90s – those early cell phones that were so clunky we carried them around in bags? Those are as unrecognizable to millennials today as plastic credit cards will become to Gen Z and the following generations.

Loyalty programs will be more integrated into buying experiences:

• Alipay is already incentivizing consumers to use its wallet in airports by offering immediate discounts such as dollars off on restaurant food purchases.
• Consumers will be prompted at POS – as they are on some websites today – about whether they want to apply their points to purchases. For example, FIS is working with Verifone on prompts at POS that ask whether consumers want to use their points towards purchases.

Issuers will be challenged to gain top-of-wallet status as payments fade into the background. I know that once I preload card numbers, I wouldn’t make a change unless there was a breach of my card credentials. How can an issuer overcome the inertia of getting consumers to switch to your card? How does your brand stay relevant in a world where the payment mechanism fades into the background?

Retailers that don’t create experiences enabling consumers to use their rewards and their coupons easily during the payment transaction will lose out.

Changing identities

The personalization of payment activities runs parallel to the transformation of invisible payments. How will consumers identify themselves? How will authorization change?

Biometric identification is here. Selfies, eye retina scans and other physical forms of identification will become mainstream. For example, in Saudi Arabia, the norm is to use thumbprints as a replacement for the debit card. The card goes away entirely. Think about how cool it would be to integrate thumbprint authentication into online shopping. Card-not-present fraud could nearly disappear. The downside? Card personalization goes away and vanity cards will cease to exist, making the color and image on a card meaningless.

The implications of the invisible payment

Issuers and their partners have work cut out for them as payments transform from artifacts to invisible:

• We have to think about how to move from transactions centered around payments to transactions centered around customer experiences. What can issuers do to improve the experience?
• We must understand the dynamics of upcoming generations – what their expectations will be and how they will identify themselves with the various experiences and payment options they have.
• We have to figure out what makes people feel good and what they identify with in order to leverage that information to execute personalization in the most meaningful way. Think about how popular Pokémon Go became last summer as people took to the streets to find cute characters. Are there ways to leverage gaming or social media? How do you deliver the “vanity card” experience to people who want it when there is no card?
• We must learn to execute in a world that’s filled with diversity in terms of what people identify with, the experiences that make them feel good and their media preferences.

What else do you foresee that needs to be done?