Payments are becoming increasingly invisible as emerging technology coupled with consumer preferences continues to drive changes to the ecosystem and the path to purchase.
Invisible payments are not new; however, how they occur continues to evolve. We’ve watched the seeming disappearance of each part of the ecosystem, from merchants, issuers, brands, and payments themselves. Through connected devices and the convergence of online and offline worlds, the path to payment has changed.
One look at Amazon Go and the store’s “Just Walk Out” technology makes it clear how far we’ve come in eliminating payments from the “payments experience.” Yet, there is still quite a way to go. Consumer habits are deeply ingrained and there will be an adjustment period for these new ways to pay. One study that inquired about people’s attitudes towards invisible payments revealed that almost half (47%) worried about being charged for things they didn’t buy and 28% worried about inadvertent purchases. Inevitably, this consumer skepticism will subside and in the coming years, invisible payments will actually drive a greater number of conversions.
The payment experience has shifted and morphed over the past decade. We are nearing the era where invisibility is ubiquitous, ushered in by some of the most innovative brands in existence. Uber is a great example. Uber made the payments experience disappear. With their in-app payment integration, they have made invisible payments a reality — by removing pain points that exist in the traditional transaction process. Not only did the innovative company introduce certainty for consumers by enabling on-demand rides, but it also removed the entire “experience” of the payments experience altogether. The payment simply happens behind the scenes at the end of a trip. There’s no interaction or even consideration of the issuer, card network, or the payment card itself at the point of payment; it’s just a completely frictionless occurrence.
Starbucks offers another prime example with its in-store mobile wallet. Still the most successful wallet of its kind in the US, it invoked its disappearing act for customers presenting physical payment credentials at the point of sale.
In the past several years, voice assistants have demonstrated staying power. The adoption of Alexa, Google Assistant, and the likes have taken off and more connected devices than ever, are voice-enabled. This growing ecosystem has slowly become a purchasing tool as more than a quarter of consumers that own one uses it to make a purchase. In 2020, sales of smart speaker units crossed 150 Million units and adding to that — experts now predict that voice shopping will reach $40 billion in the US by 2022.
Voice-activated payments are absolutely invisible but also add in new intermediaries, including the companies behind the voice technology (Apple, Google, Amazon, etc). There is also room for improvement in terms of commercial capabilities overall — which will be enhanced over time as natural language processing and machine learning become more sophisticated. The more people engage with these devices, the smarter they become.
In the grand scheme of things, invisible payments greatly impact conversions. Yes, they reduce friction and foster more consumer convenience; however, these items are just precursors to consumers making more purchases. In some cases, invisible payments are changing who gets the sale. Rather than being presented by brand, product options will increasingly be presented by reviews and price, removing the emphasis on who is selling. We’ve already seen this in some ways with food delivery services like Grubhub and DoorDash, where hungry consumers pay less attention to which restaurant they are ordering from than what they are ordering and how quickly they can get it.
As 5G emerges, the IoT will continue to scale, connecting even more devices. This will continue to drive consumers’ ability to purchase and pay in any place at any time. And we will likely shift increasingly toward invisible purchasing altogether — beyond payments. Connected devices like appliances will serve consumers in a way that smartphones do now, not only enabling purchases and payments but anticipating them and perhaps automating them behind the scenes. AI and machine learning will aid in the effort of personalizing purchases and ensuring they remain secure no matter how or where they are made.
Subscriptions will become more prevalent, allowing people to set and forget recurring purchases that don’t require input every time a purchase is needed. Voice assistants will track usage and alert consumers when it’s time to refill or purchase again, prompting the consumer to authorize the purchase, which can happen via the stored payment credentials on file. Of course, consumers will have the ability to pause, edit or cancel these purchases as needed along with ways to see exactly how much is being spent and on what. Programmable alerts can communicate these things at a regular cadence, giving people unprompted insights into their spending habits so they can adjust their budgets as needed. All of this puts more purchasing power in the hands of consumers, giving them more opportunities to make purchases conveniently and on their time.
Each of these scenarios and the emerging technology that supports them will boost transaction volumes as friction falls away and nearly everything becomes invisible, personalized, secure, and seamless.
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