12 Ways Consumers Will Pay (And Be Paid) In 2019 And Beyond

The “Twelve Days of Christmas” is a holiday classic, though some of us at PYMNTS still don’t understand why anyone would want to take a partridge away from what seems like a pleasant existence in a pear tree. But in hopes of hopping on the holiday bandwagon — and providing data-backed insight in the hottest payment trends for 2019 — allow us to offer this list of a dozen ways that consumers (and some businesses) are paying now, methods that promise to play big roles in 2019.

For the most part — and unless otherwise noted — this list is built around the new “How Will We Pay” research report from PYMNTS in collaboration with Visa. The findings in the report, which is free for download, comes from the survey responses of 2,800 U.S. consumers who were asked about the devices they own and how they use them to buy things. Those consumers also gave details about the purchases they made in the past seven days, the devices they used to make those purchases and why they made a purchase with that device in that way.

The findings — reflected in the list below — take into account the newest payment technologies while also paying attention to legacy methods that for various reasons continue to command consumer and business loyalties.

So, how will consumers (and some businesses) pay?

#1: With Multiple Devices

Owning just a smartphone — which applies to 3 percent of the population — seems so ancient these days that it’s not even hip or retro (give it time, though). Merchants must appeal to consumers who shop and transact via various web-connected gear. That not only includes smartphones, tablets and other computers — 17 percent of consumers own those but no other such devices — but connected appliances and speakers (35 percent of consumers, with the smart speaker market experiencing significant growth), and wearables (whose users, on average, have annual incomes of $79,406). More generally, 36 percent of consumer own six or more devices, and you can bet that percentage will grow in the near term.

#2: With Their Voices

Voice-assisted retail is growing faster than many observers expected, and some 27 percent of consumers own a voice-activated device, up from 14 percent last year. Consumers are being well trained to use voice for web searches and other activities, and are buying voice-activated devices that can perform payment and commerce tasks. The lucrative “Bridge Millennial” consumer segment — relatively high earning and highly educated, and approaching their peak earning years — are particularly fond of this technology, with 31 percent of owning a voice-activated speaker. Moreover, Adobe projects that voice-assisted retail will prove to be a big hit during the 2018 holiday shopping season — and that consumers already devoted to the technology will buy even more gear for themselves and others.

#3: Via Automatic Payments

No one likes checkout friction, and the growth of automatic payments enables consumers to have seamless transactions and go on with their lives. In 2018, 49 percent of surveyed consumers expressed interest in making automatic payments at the gas station, up from 41 percent in 2017. That’s not all. Interest in making automatic payments at restaurants, rather than waiting for the check, increased from 37 percent to 39 percent.

#4: Via Quicker Payouts

It’s not just consumers who pay, of course, but business and other organizations. And no one likes to wait around for funds, whether they come via paychecks or disbursements. The ongoing deployment of real-time payment technology is helping to meet such demands while bringing payment infrastructure further in the digital age. Some 24 percent of consumers would like to be paid in real time, and a hefty 70 percent of consumers are interested in shorter pay cycles. Quicker payments can have wide impact: Consumers said that if they were paid faster, they would be able to better manage their cash flow (53 percent) and pay bills (53 percent).

#5: With Payment Cards

Don’t even think of counting out plastic, which still carries a wide appeal. The propensity to use credit and debit cards on connected devices is particularly high among Baby Boomers and Bridge Millennials — with 72 percent and 53 percent using these channels, respectively. Credit and debit cards are also the preferred method of paying when consumers travel abroad. Among the 54 percent of participants who had made a purchase from foreign merchants, 68 percent preferred using credit and debit cards while purchasing from them.

#6: With Person-To-Person Mobile Tech

It’s been a year of P2P payment gains, and all signs point to even more growth in 2019. Zelle — the P2P service backed by Bank of AmericaJPMorgan Chase and other financial institutions (FIs) — said in its Q3 results that transaction volume increased 16 percent year over year, and that the total amount of money moved increased 13 percent during that same time frame. In PayPal’s recent Q3 financials, Venmo played a significant part in the positive nature of that report, with Venmo’s total payment volume increasing by 78 percent year over year. Such growth has led to payment services providers making sure in incorporate P2P in their offerings, including for restaurants.

#7: With Biometrics

The promise of biometric payments — closely tied to biometric authentication and ID verification — was demonstrated recently in China on Nov. 11, otherwise known as Singles’ Day, a big online shopping event in that country. According to one report, some 60 percent of customers paid by fingerprint or by taking a selfie during Singles’ Day. India-based Paytm, meanwhile, has started working on a facial recognition tool to enable digital payments.

#8: Via PayPal

The 2018 holiday shopping season has been more than kind so far to PayPal. For the first time in the company’s history, mobile payment volume topped $1 billion, and did so on both Black Friday (Nov. 23) and Cyber Monday (Nov. 26). On Black Friday specifically, mobile payment volumes exceeded that of Cyber Monday, though Cyber Monday still had a higher total payment volume. Black Friday mobile payment volume increased 42 percent year over year. And that’s not all. Braintree, acquired five years ago by PayPal, recently announced that it had processed more than $500 billion worth of transactions since then. It was only three years ago that Braintree achieved $50 billion in payments volume.

#9: With a Sense of Enjoyment

Let’s be honest: Until recently, payment was mundane, not fun. No one likes handing over hard-earned money to other people, not really, no matter the purchase. But that’s changing in this era of mobile and digital commerce. That’s because connected devices can make purchasing experiences more enjoyable for the consumer — assuming the user interface is not counter-intuitive and designers and merchants put serious thought into the customer experience. There was an increase of more than 13 percent in the number of consumers who told PYMNTS that they used connected devices to pay for things because they enjoyed them, growing from 47 percent last year to 60 percent.

#10: With Contactless Cards

It’s alright to be skeptical about contactless card adoption in the U.S., given the years of promise that regularly fell short of reality. But this year brought proclamations from Visa and others that U.S. consumers are finally ready to take up contactless transactions. Lower costs of card issuance, increasing consumer demand and speed are among the factors behind that. In fact, PYMNTS found that 26 percent of consumers expressed interest in using contactless cards at physical stores. Of those consumers, 84 percent see grocery as the predominant use case.

#11: Without Cash

Make no mistake: People are indeed moving away from coins and bills, and doing so rapidly. A big part of the reason is the increase in digital and web connections — 36 percent of consumers own six or more connected devices, which is hardly an optimistic data point for cash, not when there are so many other relatively easy and seamless ways to pay via mobile and the web. Those connections also mean that merchants and payment services providers keep working harder to meet consumer demand for digital payments (and, more often, not just payments, but also payment experiences, something cash cannot offer). Indeed, consumers are eager to move away from cash, with 77 percent of them wanting to use contactless payments at gas stations. Digital payments continue to make inroads everywhere. More than half of consumers used connected devices to make a purchase in seven of the 13 categories queried: 28 percent said they bought clothing and accessories, and 20 percent said they bought groceries. Sure, consumers do carry cash: Half of them carry between $10 and $15 in their wallets. But that cash is largely reserved for tipping — 39 percent of consumers said that — and purchases from smaller merchants that do not accept cards. But with the increasing deployment of relatively low-cost, low-hassle point-of-sale systems for even the tiniest of merchants, that doesn’t seem to promise a bright future for cash, either.

#12: With Growing Caution

No one has to tell PYMNYTS readers that consumers — and lawmakers and regulators and the media — are paying a lot more attention to online security and privacy, and that it’s almost certain that 2019 will bring more efforts to craft more laws to address those problems. When it comes to how people pay, 79 percent of consumers expressed concerns over data security when using connected devices to enable payment, an increase of 11 percentage points. Almost as many, 78 percent, expressed concerns over the privacy of their data. That means merchants, financial institutions and payment services providers who can address those concerns while also offering relatively friction-free transactions will gain an edge.

The coming year will bring new entrants to this list — new trends and experiments. But these dozen ways to pay provide a strong look at what’s in store for 2019.

Source: https://www.pymnts.com/news/payment-methods/2018/consumer-trends-mobile-voice-biometrics-cash/


As Mobile Checkout Evolves, Companies Like Scandit Find A Place in Payments

7-Eleven Inc. is among the latest retailers to empower consumers to become their own point-of-sale checkout when they use an app on their smart phones.

A central component of that capability is the image-capture tool built into the app. The 7-Eleven Scan & Pay service, which is in tests now and is expected to have greater availability in 2019, relies on Scandit AG image-capture technology to accurately scan a product bar code.

The Scandit algorithm first determines there is an object in the smart phone’s camera view, then it identifies the barcode, Samuel Mueller, chief executive and cofounder, tells Digital Transactions News. The barcode is decoded and converted into a universal product code. That information is sent to the merchant’s backend system for identification and pricing information, which is then rendered on the device, he says. The process happens in milliseconds.

Scandit’s role in payment is its ability to capture the product information via an image. Zurich-based Scandit does not provide the actual transaction function. Instead, most clients use existing payments partners, Mueller says.

The technology will only become more vital as more retailers adopt similar self-checkout services, Mueller says. “If you think about some of the big trends and visible projects in the market, one of the things that comes to mind is AmazonGo,” Mueller says. Amazon.com Inc.’s AmazonGo convenience stores use sensors and cameras to determine which items a shopper picks up and leaves the store with. The payment is made using the consumer’s Amazon payment credentials.

While AmazonGo is limited to a handful of store locations and to consumers with Amazon accounts, and also carries a high cost to duplicate, apps that focus on the consumer stand a better chance for retailer adoption, Mueller says. The trend to enable consumers to check out on their own phones has much broader appeal, he says. That also means self-checkout is available to more store types, too.

“What’s generally the case across these solutions is the shopping happens at the consumer’s own pace,” Mueller says. It also is much more personal, given the consumer may have started the shopping process with a map search or product search prior to visiting the store.

Some retailers may even adopt augmented-reality shopping, he suggests. In this scenario, once a shopper activates a retailer app and points the phone’s camera at products in a store, she could see pricing and product information and filter for size and other attributes. This will result in technology that can seamlessly blend the physical and digital shopping realms, Mueller says.

Others are trying to combine the two shopping environments. Earlier this week, MasterCard Incsaid it was working with Next Retail Concepts on a 3-D shoppable online experience.

Source: http://www.digitaltransactions.net/as-mobile-checkout-evolves-companies-like-scandit-find-a-place-in-payments/

POS Terminal? What’s That?

Cloud connectivity, apps, and features beyond payments are shaping the next evolution of the point-of-sale terminal.

With all the discussion surrounding merchant adoption of point-of-sale systems and integrated payments, one might think the days of the conventional POS terminal are numbered. Their days as an isolated piece of equipment with a sole function as the entry point for payment transactions may be dwindling. But, that does not mean the venerable POS terminal is about to become an historical artifact, as long as it’s not in isolation.

“Any system today, whether it’s a point-of-sale or hardware device, that is not cloud-based is dying,” proclaims Jared Drieling, senior director of business intelligence at The Strawhecker Group, an Omaha, Neb.-based payments advisory firm.

Today, a conventional POS terminal may still sit on the countertop, but with increasing likelihood it’s connected to POS software. It still captures payment data, but now it may act as the citadel, protecting the integrity of the data and sharing only the minimum information necessary with the software. The POS terminal may have a PIN pad or signature-capture capability. It may enable consumers to enter loyalty-program information or redeem offers.

In instances where there is no conventional POS terminal, a merchant likely has a tablet-based POS system in place. Since 2010, when Apple Inc. debuted its iPad and POS software developers flocked to the form factor, tablet-based POS systems have steadily gained favor among merchants.

‘Very Limited’ Growth

At first, the tablet form factor, like the smart phone before it, was innovative and attracted businesses. Then, as cloud connectivity improved, the opportunity developed to bundle other services, such as employee scheduling, inventory management, pricing, and detailed sales reports, making cloud-based POS systems the preference for many businesses, especially small businesses that now could afford them and had a need for them.

That has had a dramatic effect on the market.

Even traditional POS systems, which typically had updates performed when the maker sent a technician to install new software or hardware, are losing ground against cloud-based systems, Drieling says. Some merchants avoided these updates because they might cost thousands of dollars.

“In legacy systems [POS system makers] developed the code and would try to customize it for you,” Drieling says. “Cloud-based POS systems can be integrated with new or existing systems. It allows the developer to integrate other software into that system without having to create software to bridge the two together.”

Such developments mean that the outlook for conventional POS terminals is quickly changing. “Conventional countertop devices are going to be around for a very long time, but the growth of that category is very, very limited,” says Thad Peterson, senior analyst at Boston-based Aite Group LLC.

‘Reactionary Mode’

For sure, Square is one of many to launch so-called smart terminals, which use apps and enable easy integration to POS software. Square chief executive Jack Dorsey even heralded the new Square Terminal during a November earnings call as the replacement for “dinosaur” POS devices. The same month, payments provider North American Bancard Holdings LLC launched its own smart terminal, joining competitor Poynt Co., which debuted its device in 2014.

The common denominator in all these devices is the connectivity. That is a boon to small businesses, which had to forgo POS systems of the past because of the costs. “The most critical point to why these cloud-based systems are growing, primarily in the small and mid-size space, is they allow a lot of integration,” Drieling says.

This ability to integrate payments with software that can run other business functions is much sought-after in retail. In August, for example, payments provider Global Payments Inc. paid $700 million for AdvancedMD, developer of medical-office management software.

This all points to a very cloudy future. For the likes of Verifone Systems Inc., Ingenico Group, and Equinox Payments, which sprang from the former Hypercom Corp.’s U.S. unit, their roles as providers of traditional POS terminals will change, Peterson says.

“The challenge with the Ingenicos and Verifones of the world is they are in reactionary mode,” he says. “But they’re easily disrupted by players coming in with more flexible and lower-cost offerings.”

Going Up Market

It’s not for lack of effort on their part. San Jose, Calif.-based Verifone, which went private this fall, has been emphasizing services revenue for years and launched its Carbon line of smart terminals to better compete.

Paris-based Ingenico, too, has grown its services revenue and made changes. In April, it launched the Moby/C150 ECR that features an Android-based tablet with a 15.6-inch display.

As it adapts to changes among merchants and consumers, Ingenico finds itself examining the point of interaction between consumers and merchants. While Mark Bunney, Ingenico North America director of go-to-market strategy, says there will still be customers for standalone POS terminals, the market is changing.

“Lots of the tablet or mobile POS providers are definitely changing some of the dynamics in the market­place,” says Bunney. “We have to change not only from a hardware perspective, but [in] how it’s going to impact our software and services.”

Bunney points to Apple’s own retail stores and Amazon.com Inc.’s Amazon Go locations as examples of this change. There is no POS station in an Apple store. It’s all mobile, Bunney says. And in Amazon Go stores, the consumer’s own smart phone with the Amazon app is the payment mechanism.

Of the three primary categories of POS-terminal technology—the standalone device, the integrated POS, and mobile POS—demand for standalone devices is declining, Bunney says.

“That’s part of the market migrating to an integrated solution or going to a more tablet solution,” he says. “The other thing we’re seeing in the integrated market is merchants as well as the consumer want to have additional interaction beyond just the payment with the merchant.”

That mirrors what Peterson sees in the market. “The customer experience used to be managed by the merchant,” Peterson says. “Now, the consumer controls their own experience.”

That control has been enabled by the versatile tablet. “Now, the POS could look like a tablet,” Bunney says. It depends on the type of interaction consumers want, he says. “People want sleeker-looking solutions,” he says. “They don’t always necessarily want to have a separate payment device from the tablet.”

That’s not to say that a tablet, or cloud-based POS system, is for every type of merchant. Bunney doesn’t think large merchants would be as satisfied with a tablet-centered POS as they would be with something designed for their complex needs.

Still, some cloud-based POS system providers have made moves to go up market. Square Terminal, with its integration capability, is one example, and First Data Corp. is promoting its Clover POS system for fine dining.

Postponing Extinction

How the POS experience will adapt is uncertain, with its dependence on how consumers shop and the technology they use and how merchants react to these changes.

However it evolves, there will be integration of the payment-acceptance device into the overall checkout experience.

“The standalone device where it’s not talking to the POS is in decline,” Bunney says. Yet he doubts it will disappear completely, despite Square’s claim the older tech is a “dinosaur.” “In some areas, it may not be growing at as fast a rate,” he says. “There is still that interest level.”

The hardware side may not change too much in the near future, Bunney says, with the exception of some devices, like tablets, gaining contactless-payment acceptance. Most POS terminals shipped since at least 2015 by the likes of Verifone, Ingenico, and Equinox have contactless tech built in, if not yet activated.

Better contactless identification marks may be part of future devices, Bunney suggests. “How do you make it easier for the consumer to interact from a hardware perspective?” he asks.

POS software, in all forms, will evolve much faster, he says. Not only will industry standards from EMVCo, which sets the specifications for EMV chip-card acceptance, influence this, so will PCI Security Standards Council standards on PIN-on-mobile, which enables commercially available devices to securely accept PINs.

PIN-on-mobile is one of the trends Peterson sees influencing the evolution of the POS experience. It’s devolving the POS into smart devices that are not POS devices, he says. More use of mobile devices, especially for in-aisle checkout, and increasing awareness and availability of alternative payment methods are two other trends.

The Ultimate Payment

The so-called traditional POS makers will have to evolve, says Drieling. “They need to come out with some competitive products,” he says. “They know the POS industry very well. They probably have the capability to bring out some competitive cloud-based POS products. I don’t see them doing very much in the independent software vendor space.”

The future POS may not even resemble a POS device or tablet.

Even Amazon’s Alexa voice assistant almost qualifies as a POS device, Drieling says. Echo and other in-home devices enable consumers to use their voice to authorize orders. “The next step is unified commerce,” he says, allowing a consumer to start a transaction in one channel and go through others until making the ultimate payment.


Source: http://www.digitaltransactions.net/magazine_articles/pos-terminal-whats-that/