Commerce paradigms are shifting, but with new technologies and quickening innovation, the question remains if real value is still being delivered. Michelle Tinsley, director of mobility and secure payment solutions, Internet of Things group, retail solutions division at Intel, shares why the industry can’t forget about value while speeding down the path to transforming payments.
PYMNTS consulted 21 payments executives from across the industry to share their insights on the biggest takeaways from 2016 as part of the “Payments 2016, The Year Of…” eBook. We posed the same question to each executive:
If you had to answer the question, Payments was the year of …, how would you answer, and how does your answer change your world — and the world of payments, more broadly?
Here is the response from Michelle Tinsley, director of mobility and secure payment solutions, internet of things group, retail solutions division at Intel…
Payments 2016: The Year Of Major Shifts in Payments
Emerging Technologies Are Finding New Ground In Payments, Facilitating New Commerce Paradigms
Recent technology advancements, particularly in the Internet of Things (IoT), are driving major shifts in payments. These innovations aren’t necessarily new, but they’re finding new ways to change commerce. Here are three key shifts we’ve seen in 2016.
We’ve Got The Technology. Where’s The Value?
2016 saw a shift away from talking about payment technology and toward generating experiences around payments that offer real value to consumers and vendors. In Asia, Alipay allows consumers to pay for everything they need with a popular chat app. Alipay allows consumers to order a cab, buy food and send a gift to a friend, all within the same app that hundreds of millions of people use daily to communicate. So if you’re traveling to Beijing, don’t count on your taxi driver being able to make change. Expect Facebook Messenger to follow suit, as they incorporate retailers into the Messenger experience. Soon, Facebook Messenger’s more than 400 million-plus users will be able to get alerts regarding products they might be interested in and then manage the shipping and all other aspects of the transaction — including payment — in Messenger.
These holistic, streamlined experiences bring customers and businesses closer together. The challenge with this business model is getting more retailers on board around the world. Will they let a third party manage the communications for them to the masses, or will they feel the need to own that channel themselves? Yet, as Asian tourists travel abroad to popular shopping destinations, retailers in the United States and Europe will be forced to follow suit and accept these new payment mechanisms. And acquiring the necessary infrastructure for receiving these payments can be as simple as landing a properly configured tablet at the location.
Cryptocurrency Is All About Speed.
Bitcoin and other cryptocurrencies have gained traction with certain groups of consumers with startling speed. But businesses are shifting away from a consumer model for blockchain currencies and finding new utility for this technology. It’s helping to innovate slow-moving transactions that haven’t really advanced since the early days of the Internet — invoicing and bond payments, for example. Typically, a cryptocurrency transaction can take as long as 20 to 30 minutes — far too slow for broad adoption in retail currently. But when a cryptocurrency transaction replaces an invoicing process that takes three days to complete, it can innovate entire business models, not to mention improving the speed and responsiveness of almost every business’s supply chain. Expect these speed advantages to become irresistible to many businesses. The times to validate these transactions will shorten over time, but don’t expect to pay a major retailer by bitcoin in the coming year.
IoT: From “If?” To “How?”
IoT technology has been on people’s radar for a while, and the latest projections indicate that it’s here to stay. There are more than 12 billion devices already connected, and in the next few years, spending on IoT technology is projected to grow at a staggering 16 percent per year, eventually reaching $1.5 trillion by 2020. In the same timeframe, the number of connected devices will reach 30 billion. Now businesses are beginning to focus on the “how” of IoT: How will this profusion of connected devices make a lasting impact on commerce?
Augmented reality (AR) seems to have found its killer app this year: Pokémon Go. This AR game, relying on IoT technology, has all but taken over the world, and it’s already generating payments galore. U.S. users alone have been spending $1.6 million a day in Pokémon Go. Convincing these users to embrace shopping for physical products using AR technology doesn’t seem like too much of a stretch.
Beyond people using IoT devices for pay, the devices are beginning to make payments themselves. Connected car technology, for example, can use GPS and other sensor technology to automate payments for tolls and other driving expenses. Instead of asking the consumer to pull out their phone, download an app, set up payment information and then conduct the transaction, a connected car can handle it all. This same model can be applied to meters that monitor electricity usage or a wide range of other IoT devices. It may be several years before consumers embrace the idea of their refrigerator ordering milk because it detected that they’re out, but the road is being paved.
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