The world of finance is changing in major ways. This week at Money20/20 a number of major innovations and announcements surfaced, many of which had biometrics and mobility at their core. That is to say, biometric mCommerce, something that wasn’t much talked about at last year’s Money20/20, was the hot topic of conversation in Vegas this week.
Part of what is so exciting about the new innovations in mCommerce, is the involvement of the three major payment networks, Visa, MasterCard and American Express.
Speaking in a keynote presentation Visa’s president, Ryan McInerney, shed light on the three big ideas that are shifting the financial paradigm on a global scale.
Mobility, according to Inerney, has presented the opportunity to bring personalization back to commerce. He uses the example of the relationship between his father and the neighbourhood butcher. Personal brick and mortar store relationships hide the commercial transaction underneath a layer of society and trust. Or, at least they used to.
When McInerney’s father would go into the butcher’s for some meat, the order would already be ready to go and the cost would be added to the customer account allowing the actual interaction between to be completely personal. Removing the focus on transacting allows for a more positive customer experience.
The modern iteration of this highly personal experience can be observed in the frictionless mobile commerce transactions slowly working their way into everyday life. Uber, the ridesharing service, allows you to simply get in a person’s car and have them drive you to your destination with as little or as much conversation as you like. The destination information, scheduling and payment has all been taken care of through the Uber app.
When you get out of an Uber, not having had to physically deal with the financial transaction, McInerney points out that it feels just a little bit magical.
This magic – essentially invisible financial transactions – is where payment is heading. We can see it most apparently in the week’s major announcement from Bionym, that its biometric wristband will be authorizing payments through the tap of a user’s wrist. But our journey into the new world of lowest possible friction payment phenomenon is just getting started.
McInerney pointed out during his keynote that mCommerce abandonment rates are still very high. To combat this resistance, he says Visa is aiming to give users what they want, namely: financial experiences that are intuitive, instinctive and inherently safe.
He highlighted three major changes happening that will accommodate these consumer needs. Tokenization, the move from the mailbox to the cloud and opening the edge of the payment network.
Tokenization – filling the demand for inherently safe solutions – is already happening. Essentially, the account number on a credit card is being reinvented to become more secure. With tokenization the actual account identity is hidden, and a substitute number is used to identify you as a trusted entity. This is the popular privacy feature first seen in Apple Pay. With tokenization, if the substitute account numbers are compromised it simple doesn’t matter, they won’t work.
By moving from the mailbox to the cloud, McInerney is talking about providing real time eServices for account holders. Credential management is far from intuitive in its current mail reliant state. The suggestion here is that with the proper infrastructure, users can apply for a card in real time, get approved and start spending through their smartphone in seconds rather than weeks. The same applied to the issuing of new account numbers in the case of compromise or renewing expired accounts with new expiry dates.
Finally, by opening up the edge of the payment network Visa is aiming to allow its partners and clients to better serve customers with intuitive transaction experiences. According to McInerney, thanks to an unbundling process that Visa is undertaking which involves the development of APIs to be used by clients to enable custom payment feature, the future will start to look a lot more like a more secure version of the past. Specifically, the one he described with his father at the butcher shop.
When you swipe of tap a Visa card in the future, thanks to this unbundling, tokenization and cloud infrastructure, you won’t need to worry about the inconveniences we’ve learned to live with. If you lose a receipt for transaction validation, no worries, it’s in the cloud. If you forget your coupon, again, it’s in the cloud, you’ll receive an automatic discount when you pay.
For a very long time, the common knowledge was that in order to disrupt the current payments ecosystem, a new transaction method would need to some how be easier to use than a credit card. Thanks to NFC payment – tapping with a card to perform low risk transactions – that is a pretty tall order. With companies like Visa looking to work closer with partners in directing the evolution of new payment methods, however, it looks like rather than disruption the name of the game is paradigm shifting.
The future of payments is coming. It’s personal, safe and magical.