For the longest time, swiping and dipping credit & debit cards has been the default payment option for most consumers. But in recent years, many new options have emerged, to the point where there's less and less need to take a physical card out of one's purse or wallet when making a payment. And now, transformation in the payments world seems poised to accelerate dramatically, driven by a combination of technological advances and the desire to make the payment experience faster and more convenient than ever.
If you're a merchant or a small business, this is mostly great news, as better ways to pay can not only make for a better customer experience but also help grow your business.
With all that in mind, here is some of what you can expect to see—or expect to see more of—in terms of ways consumers will be paying in 2020 and beyond.
Smart speakers and AI-powered personal assistants
According to Marketing Land, there are more than 65 million smart speaker owners in the U.S., or about 23 percent of the population over the age of twelve.1 To date, smart speaker/personal assistant usage hasn't been commerce-oriented, as only 26.1 percent of users have ever tried making a purchase using one of these devices, and only 15 percent do so on a monthly basis.2
But those percentages are likely to rise as smart speaker manufacturers work to make their products more commerce friendly—by adding displays, for example. At the same time, AI-powered personal assistants seem destined to get better at facilitating voice shopping, while consumers become more accustomed to using personal assistants to manage their home and lives. So what is a $2 billion industry today could be $40 billion by 2022.3
Social media payments
Yet another arena where payments are poised to make further inroads is social media. To be sure, peer-to-peer (P2P) payments apps like Venmo® are already wildly popular, useful for paying one's share of a bill being split amongst friends or family. And Facebook® has its own P2P payment tool that utilizes Messenger, which many also find useful for exchanging money with friends.
Meanwhile, Pinterest® appears to be doing a better and better job of enabling users to purchase items from its platform, in part by making it easier for brands to connect with potential customers by:
- making it possible for brands to upload their entire product catalog all at once, and
- making shopping ads available to all brands on a self-service basis
No doubt this is a more-than-worthwhile effort on the part of Pinterest, especially when you consider that “84 percent of weekly Pinterest users use the app before making buying decisions, and … 83 percent have made purchases based on Pinterest content.”4
But Pinterest isn't the only social media behemoth working to up its game by enabling users to shop on site. Earlier this year, Instagram® “enable[d] in-app checkout for its shoppable posts,” in effect “streamlining the process of purchasing things within its mobile app” and bringing Instagram “one step closer to its vision of becoming the only [digital] shopping mall you'll ever need.”5
Pay as you go, in “connected cars”
As for one of the “almost-here” revolutions in the world of e-commerce, making payments via connected cars is right around the corner, if you will. According to Statista®, “it is estimated that some 83 million cars that are to be shipped in 2020 will be connected to the Internet,” a rapidly growing percentage of the new car market.6
"Transformation in the payments world seems poised to accelerate dramatically, driven by a combination of technological advances and the desire to make the payment experience faster and more convenient than ever."
More important, still, auto manufacturers, major credit card brands and other interested parties are teaming up to develop systems that will allow drivers and passengers to pay for gas, parking and food via the dashboard of their car.
For instance, Visa®, Mastercard® and Paypal® are collaborating with Honda® on a Dream Drive™ initiative, which will allow users to pay for gas and parking via two in-car apps. (In a nutshell, the way it will work is that a beacon will sense your car's arrival at, say, a fuel pump, in effect “waking up” the relevant app. Then the beacon and car will together determine the amount of fuel needed, at which point you will place your order for fuel from the dashboard.)
As one might expect, Honda isn't alone in pursuing this avenue of development. GM has a connected Marketplace application in select cars & trucks and crossover vehicles from among its brand lineup, and Hyundai is developing its own connected car experience with payments technology. For its part, Amazon™ has announced plans to launch Echo Auto™, an invitation-only device that allows users to “add Alexa® to your car,” even as it works with automakers like BMW® and Toyota® to develop a better in-car digital assistant experience.
Finally, there's the new world of machine-to-machine (M2M) payments, which is being driven by the rise of the Internet of Things (IoT) and the massive increase in the number of Internet connected devices, including TVs and all manner of home appliances and gadgets.
While M2M capabilities are still in their infancy, it likely won't be long before we see more and more payments being made without human intervention, involvement or even confirmation, the latter sometimes described as fully autonomous M2M transactions and payments. Already, “a steadily increasing number of IoT consumer devices can leverage payment information to make purchases on our behalf, such as the automatic re-ordering of laundry detergent” (by your Internet-connected washing machine).7
Meanwhile, both blockchain and advancements in AI are paving the way for further developments in the world of M2M payments.
Questions about new payment technologies?
If you have questions about the aforementioned technologies or would like to know more about how cutting-edge payment solutions can help grow your business, give us a call at 1.888.845.9457 or contact us online. We're here to help.
- “Report: 65 million smart speaker owners, smart displays quickly gaining traction,” Marketing Land, https://marketingland.com/report-65-million-us-smart-speaker-owners-smart-displays-quickly-gaining-traction-258267
- “What is Alexa Voice Shopping and how do you use it?” Tom's Guide, https://www.tomsguide.com/us/alexa-voice-shoppingtutorial,news-25370.html
- “Pinterest rolls out new social shopping features for mobile payments users,” Payment Week, https://paymentweek.com/2019-3-7pinterest-rolls-out-new-social-shopping-features-for-mobile-payments-users/
- “Instagram's new shopping feature makes it a digital mall,” Wired, https://www.wired.com/story/instagram-in-app-shopping-feature/
- “Estimated shipments of connected cars globally from 2017-2020, Statista, https://www.statista.com/statistics/743400/estimatedconnected-car-shipments-globally/
- “Are fully autonomous M2M solutions the next revolution in payments?” Capco Institute white paper, https://www.capco.com/Intelligence/Capco-Intelligence/Are-Fully-Autonomous-M2M-Solutions-The-Next-Revolution-In-Payments