The future of the payments industry

To predict what the future of the payment industry holds right now is almost impossible. Not only are current options constantly developing, but new possibilities also keep emerging at a fast rate.

Just as we are all getting used to paying for goods online the e-commerce market is growing steadily, suddenly platforms like social networks and mobile have arrived to claim their stake in the world of payments. The most recent development includes NFC (near field communication), where shoppers can just swipe their phones over special readers at checkouts, replacing the need for wallets and cards when shopping.

An emerging technology also taking shape is mobile barcode payments, which essentially turns smartphones into wallets. Users signed up to the scheme can generate unique barcodes on their devices, which are then scanned at points of sale; following this the customers account is debited accordingly. There is already a decent number of companies offering this service.

Even more recent development allows retailers to assign a simple numeric code to each of their products, which can then be entered into a mobile checkout where a customer can complete a payment.

There are many more ideas and possibilities floating around, which may or may not see the light of day, but nonetheless provide further proof of how much this industry is evolving.

This state of affairs can be tricky not just to payment service providers, but for retailers too. For obvious reasons business owners who rely on being able to collect payments from customers want to be able to offer as many options as possible in order to decrease the risk of missing out on sales.

There are however some major obstacles inhibiting this progress. The three of the most pressing ones are security, ease of implementation and consumer adoption.

Most would agree that ease of implementation should be the simplest of those to overcome, because the onus is fully on the developers to ensure that they are straightforward to adopt.

The other two issues however will be much more difficult to settle and what is more the latter one depends largely on the former being resolved in the first place. This is because most shoppers will not feel confident about using a technology which leaves them open to fraud. Unfortunately the best way of preventing such criminal activity is through building a database of previous transactions and using this information to judge any future ones. The predicament is fairly easy to see here.

It took the e-commerce industry years to build up both the trust and the transaction history before we all started to feel comfortable entering card details into online payment pages.

The future of the payments industry is both bright and bleak. It will need to evolve to incorporate the changing habits of consumers, but the last thing anyone wants is a massive scandal sparked by a serious security breach. Understandably everyone is cautious about any new developments. Some companies are willing to take more risks than others, but most prefer to sit back and watch rather than step up to the front and get burnt.

The recent spike in ideas shows that the possibilities are countless. It will however be impossible for so many payment options to succeed. Most of us have one or potentially two methods via which we prefer to pay for goods or services. Cards are the option which a vast majority would use, which leaves room for maybe one additional method which we would adopt as an alternative. It will almost certainly need to be easier and more convenient to use than a card; otherwise the switch would be pointless.

NFC has found many supporters and is already being adopted by some famous brands, but by definition it can only be used on transactions involving small amounts, unless we find a way of disabling this feature when the device is not being used by the owner who linked it to his/her bank cards.

More pressingly the industry has to resolve the security issues around regular mobile payments, which are being lauded as the future by some. Even though websites can be accessed on those devices, many of the security features are still non-transferable.

Those who today try to predict how we will be paying for our shopping in two years time are not being reasonable. All of the currently known solutions still lack on many fronts and it is difficult to see how any of them could find wide adoption any time soon. You can’t help but feel that only a much more radical idea will be able to shake the current consensus on the payments front.