What’s the buzz(words) for the payments industry?

Every industry has its buzzwords. Here’s a few key words for the payments industry to keep you in the know.  

What’s the buzz(words) for the payments industry?

Aug 20, 2018

What’s the buzz(words) for the payments industry?

Every industry has its buzzwords. Here’s a few key words for the payments industry to keep you in the know.

With 2018 more than half over it’s time to take a look at payments industry-related buzzwords that seem likely to gain further traction during the remainder of 2018 and 2019. Keep in mind that these buzzwords aren’t necessarily new; it’s just that they are likely to take on greater significance in the minds of both business owners and consumers in the near future.

Biometrics (and Identity)

One trend that is already well underway is the use of biometrics to confirm identity. The hope is that biometrics will allow us to move beyond the PIN and password with new ways to authenticate users. While some of the technology has been around for a while, consumers have increasingly become accustomed to the idea of being identified by their unique traits in the five years since Apple® introduced Touch ID®, “a simple and secure way to unlock your phone with just a touch of your finger.”1 

But this trend promises to pick up steam over the course of the next year, as Apple is expected to answer Samsung’s® iris scanning technology with Face ID®, the latter of which will likely be included “in three new iPhone® and two new iPad® models that will launch late in Q3 2018,” advises BiometricUpdate.com.2

For the uninitiated, according to Apple Support, Face ID promises to “revolutionize authentication using facial recognition technology,” using advanced technologies to “map” the geometry of your face, allowing you to unlock select Apple products (like the iPhone X) with a glance.3 

And that’s not all. “Apple and Samsung are both reportedly preparing ultrasonic fingerprint sensors for in-display integration in smartphones,”4 thereby taking fingerprint authentication to the next level. 

Meanwhile, all manner of physiological and behavioral measurements might soon be used to authenticate people, everything from the shape of your ears to the rhythm of your typing, or the way you utilize a mouse. Even your brain waves might soon be used for authentication purposes advises Digitus Biometrics, which notes that “researchers may soon be able to use the way a brain responds to a computer screen as a foundation for a new biometric security system.”5

Near Field Communication (NFC)

Another technology you may soon hear more about is Near Field Communication (NFC), which is short-range wireless technology that permits a digital device (smartphones, tablets) within a few inches of another digital device to communicate. Again, this technology isn’t new, it just hasn’t yet become mainstream is the United States yet.

But there are signs this is about to change. According to the 2017 TSYS U.S. Consumer Payments Study, released in April 2018, 68 percent of consumers plan to make more than 50 percent of their in-store purchases using their digital wallet within two years, which should enable the continued growth of contactless payments such as Apple Pay® and Samsung Pay®.

The way contactless payments work is the consumer simply waves an NFC-enabled smartphone or mobile device—one set up with a payment app that includes payment information—in front of an NFC receiver at the point-of-sale. After validation is complete, and the transaction is authorized, a completed sales receipt is issued. There’s no need for the consumer to swipe or “dip” their credit or debit card, which has the benefit of making transactions more secure.

This trend is likely to gain ever-increasing traction as more smartphones and mobile devices are equipped with built-in NFC technology and more credit card companies issue cards with contactless payment capability,6 that is, cards with chips and antennae that allow you to “tap” your credit card instead of a mobile device.

Notably, public transit can be a venue for wider usage of contactless payments. By allowing riders to tap their phones, transit agencies could largely eliminate old-fashioned tickets, tokens and passes and thereby improve the rider experience.

Scan and Go

In the world of retail, the phrase “Scan and Go” is something you’re more and more likely to encounter in the coming months. Supermarkets especially, as well as big box retailers are big fans of this technology. Grocery giant Kroger has been rolling out its “Scan, Bag, Go” service in 400 stores this year, which allows shoppers to scan items as they shop using a store-provided scanner or smartphone app. Currently shoppers check out at a self-checkout station, but they will soon be able to pay through the app, saving the time they might otherwise spend waiting in a checkout line.7

Push Payments (aka Instant Payments)

Speaking of saving time, one can make a good argument that the next big thing in payments will be push payments--a form of instant payments that have been described by Payments Source, as “debit transactions in reverse” (where instantly usable funds are sent over existing networks).8 

In other words, “the bank sponsorship and compliance tools are the same, and consumers do not have to open a new account or memorize a new PIN—they simply use the cards and payment instruments they already know and love,” notes the above-referenced Payments Source article. 

That is, a push payment can be sent to a debit card, credit card, reloadable card, online wallet or PayPal® account, among many other options. Instead of waiting for funds to arrive same day, next day, or in three to five days, payment recipients receive their money immediately.

It’s easy to envision scenarios in which push payments would be valuable to consumers or small businesses—especially when funds are needed urgently. For example, an instant loan approval could be followed with instantly available funds. Or in the case of a cancelled or overbooked flight, a push payment made by an airline would allow a stranded traveler to buy food or reserve a hotel room with the funds straight away, instead of fronting the unexpected costs and receiving a voucher to be redeemed later.

“To me there are three pieces to what I consider to be an instant payment,” says Drew Edwards, CEO of Ingo Money, in an audio interview with PYMNTS.com. “They have to be on-demand [and] settlement has to happen 24/7, with real, final funds that are available to spend instantly.”9

A real-life example is Uber’s “Instant Pay” feature, which enables enrolled Uber drivers to have their compensation sent to their debit card in real-time using Mastercard Send™ technology. According to Mastercard’s July 2018 white paper  Uber drivers have already received more than $5 billion via instant payments, in turn reinforcing card preference and increasing card usage, as “the receipt of funds via a consumer’s debit card has been shown to increase engagement with that card.”

These are just a few of the reasons why “real-time payments are experiencing increased demand worldwide, as they deliver significant value to all participants in the payments ecosystem,” according to the white paper. Better yet, the path to widespread adoption is clear. “Card-based push payments offer consumers an especially convenient payment experience,” concludes Mastercard. “Recipients need only provide their 16-digit [debit card] number … meaning they do not need to have ready access to checking account and routing numbers…. The user-friendly card-based process increases consumer engagement, which in turn boosts follow-up spending, loyalty, and top-of-wallet status.”

As the payments industry begins to move into the last fiscal quarter for 2018, and execute planning for 2019, expect your vocabulary to grow with an abundant harvest of buzz words.

1. Apple Announces iPhone 5S – the Most Forward-Thinking Smartphone in the World, press release, https://www.apple.com/newsroom/2013/09/10Apple-Announces-iPhone-5s-The-Most-Forward-Thinking-Smartphone-in-the-World/

2. Apple likely launching 3 iPhones and 2 iPads with Face ID this year, BiometricUpdate.com, https://www.biometricupdate.com/201807/apple-likely-launching-3-iphones-and-2-ipads-with-face-id-this-year

3. About Face ID advanced technology, Apple Support, https://support.apple.com/en-us/HT208108

4. Samsung and Apple introducing ultrasonic in-display fingerprint sensors, eventually, BiometricUpdate.com, https://www.biometricupdate.com/201805/samsung-and-apple-introducing-ultrasonic-in-display-fingerprint-sensors-eventually

5. Innovations in biometric security, Digitus Biometrics,
http://www.digitus-biometrics.com/blog/innovations-in-biometric-security/

6. 8 Things You Need to Know About NFC Technology and Contactless Payments, Midwest POS Solutions, http://www.midwestpos.com/2018/03/nfc-technology/

7. Kroger expanding its Scan, Bag, Go program to 400 stores, Food Dive, https://www.fooddive.com/news/grocery--kroger-expanding-its-scan-bag-go-program-to-400-stores/513855/

8. Checks won’t cut it in the ‘instant pay’ age, Payments Source,
https://www.paymentssource.com/opinion/push-payments-can-meet-instant-payment-needs

9. Beyond the Buzzwords podcast with Drew Edwards, CEO, Ingo Money, https://www.stitcher.com/podcast/pymntscom/beyond-the-buzzword/e/53546571

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