Evolving technologies, evolving consumers

There is a new wave of digitization that is driving deep changes across the payments landscape. Consumers are constantly connected, able to shop and pay across devices and channels–whether it’s in stores, online or through apps. This rapid growth in digital commerce, especially in mobile, is pushing merchants and issuers to adopt an increasing number of new technologies to provide their customers with innovative and seamless payment options. Visa is continually working to build a suite of capabilities so clients can embrace this disruption in payments and deliver innovative new payment experiences, revolutionizing the way consumers pay digitally in the same way that it has for consumers paying in stores.

Payment innovations accelerating the pace of disruption

Universal connectivity, tokenization, biometrics, cloud computing and the Internet of Things (IoT) are expected to significantly impact the way consumers transact and interact with their payment providers over the next few years. By 2020, it is expected that 34 billion devices will be connected to the internet worldwide¹. Many of these connected devices such as appliances, cars and utility meters will have a credential on-file to place orders, pay tolls or pay bills.  As new IoT payment experiences enter the market, financial institutions should further innovate, through enhanced card benefits, holistic marketing, new partnerships and other avenues. The ubiquity of connected devices will also accelerate the pace of innovation expected of merchants. Merchants can leverage connected devices and the data generated from them to improve customer experiences, ranging from more streamlined checkout to better loyalty programs.

Driver of the digital payments revolution

Financial institutions and merchants should develop product offerings that meet the needs of consumers whose behavior is being transformed by four technology drivers:  

Universal connectivity: Given the growing array of communication channels, it is important that merchants and financial institutions provide services across all devices and the platforms that power them, to be wherever their customers are shopping. In many cases, this will also mean setting up systems to carry out peer-to-peer (P2P) payments and developing the ability to digitize and streamline manual processes.

Unified data: More than 90 percent of the world’s data has been created in the last two years, and the amount of data is expected to double every two years². Unified data allows companies to quickly and repeatedly enhance their customer experience, whether through geolocation, biometrics, cross-device tracking or other offerings. For example, a recent Accenture study stated that nearly half of consumers report they would be interested in spending analysis based on their transaction data in real time, and half want their financial institution to proactively recommend products or services that can help meet their financial needs³.

Lower barriers to entry: It is becoming easier for new players to monetize the opportunities presented by increased connectivity and unified data. Decreasing computing expenses have lowered the barriers to entry over the past decades enabling a range of companies to manipulate and communicate data more broadly and cheaply. Mobile distribution allows startup companies to go directly to consumers by developing easy-to-use apps and marketing them through social platforms.

Simplified integrations: Designing flexible customer-focused services that respond to these innovations in connectivity will help with anticipating new forms as they arise. Additionally, financial institutions should build accessible APIs (Application Program Interfaces)⁴ as building blocks to facilitate development and integration of digital capabilities.

Visa: Building capabilities for a digital future

Visa offers several services and solutions that help financial institutions, merchants and technology players develop and execute their payments strategy in an environment being rapidly transformed by the key trends discussed.

To meet the expectations of connected consumers, Visa has extended customer offerings to new channels including mobile and the IoT through the Visa Token Service, new use cases like P2P through Visa Direct and newly digitized and streamlined manual processes through Connected Card. Data-focused solutions, like Token Lifecycle Management, Visa Performance Solutions and Mobile Location Confirmation, help Visa clients optimize and personalize customer experiences in an age where smart use of data can set them apart from their competition.

As barriers to entry for competitors in financial services are becoming lower, Visa is dedicated to creating products and services that enable financial institutions to increase their customer stickiness through products like Visa Checkout, Digital Controls and Visa Commerce Network. Visa’s focus on Human Centered Design, APIs available on the Visa Developer Platform and Visa’s One Market Center shows how Visa is making it increasingly easier for clients to innovate at scale and win cardholders with engaging experiences that can integrate easily.

Perhaps most importantly, Visa is constantly working to expand its offering to respond to new trends in digital payments as they appear.

To learn more read the third post in the series: Thinking differently about the value chain, or the full report: The next wave in digital payments.

¹BI Intelligence“Here’s how the Internet of Things will explode by 2020”, Aug 31, 2016; predicting a total of 34 billion devices connected to the internet by 2020, including 24 billion IoT devices, and 10 billion traditional computing devices.

² BCG, Navigating a World of Digital Disruption, 2015; IBM Marketing Cloud, 10 Key Marketing Trends for 2017, 2017.

³Accenture, The Digital Disruption in Banking, 2014 North America Consumer Digital Banking Survey.

⁴An Application program interface (API) is a set of routines, protocols, and tools for building software applications. An API specifies how software components should interact. Additionally, APIs are used when programming graphical user interface (GUI) components. A good API makes it easier to develop a program by providing all the building blocks. (From Webopedia.)