Innovation in Payments Won’t Come from New Technology
The payments industry doesn’t need to reinvent the wheel for cashless innovation.
The drive to access the digital economy during the pandemic has been behind much of the disruption in payments this year. COVID-19 has pushed the industry to think fast and contactless payments have emerged as a lifeline for businesses and consumers. Interestingly, a lot of the innovation that is taking centre stage leverages existing technologies, but in new ways to tackle new problems. Most notably, the QR code saw a revival and has become an increasingly popular way of paying for goods and services.
Crucial to the success of the QR code payment is the fact that simply, it’s a technology that is accessible to anyone with a smartphone in their pocket. And this signals a much bigger trend we’ll continue to see during the pandemic and beyond – we don’t need to reinvent the wheel to create disruptive payment solutions. Instead, the most exciting innovations will leverage technologies that are within reach of consumers and businesses. This will be the key to seeing widespread penetration of new payment experiences.
Opening up the digital economy with the smartphone
While much of the contactless payment drive has focused on the ease of access for consumers, it’s not been such an easy ride for businesses. Large swathes of micro and small businesses that were predominantly cash-based have had little choice but to accept contactless payments during the pandemic. But one of the challenges that come with this payment revolution is that contactless point-of-sale (POS) hardware can be costly and complex to maintain for businesses. This can present a financial burden for micro and small businesses that want to access the digital economy and accept contactless payments.
The launch of Visa’s Tap to Phone solution and the comeback of the QR code show what can happen when you keep innovation simple.
The launch of Visa’s Tap to Phone technology in October is a pivotal step towards breaking down this barrier for businesses. And its genius once more comes down to harnessing existing technologies – again, the smartphone – in innovative ways to open up access. Visa Tap to Phone transforms Android smartphones and tablets into contactless POS terminals so sellers can accept contactless payments from their customers.
By removing the need for costly POS hardware and complex maintenance, it is enabling smaller businesses to download an app and accept contactless card or mobile wallet payments within a matter of minutes. The proliferation of mobile means Tap to Phone is well within reach of businesses of all sizes – and the customers they serve. And this is key if we are to see widespread adoption of new payment experiences among businesses.
Visa’s Tap to Phone innovation signals the end of POS and the start of easy access to cashless payments for businesses.
Easing emerging markets into the cashless economy
What works for one market, might not necessarily work elsewhere. In emerging markets, the technology that is accessible to both consumers and businesses can vary and that can dictate what is possible. With many markets around the world still predominantly cash-based, there is also a greater challenge to ease consumers and businesses into cashless payments, in some cases, for the first time. Again, using technologies communities are familiar with and already comfortable using is an important first step to encourage adoption.
If new payment solutions are to see widespread uptick and success in these markets, understanding of local market behaviours will be crucial. It comes down to learning the unique challenges faced by the local community, as well as their attitudes towards cashless payments. Only then can you explore the tools accessible to them to create payment solutions that stick.
Let’s keep it simple to make real change
The launch of Visa’s Tap to Phone solution and the comeback of the QR code show what can happen when you keep innovation simple. These technologies are transforming payment experiences for consumers and business alike around the world. And it’s all powered by the humble smartphone – a device mostly all of us carry in our pocket.
By using the existing technologies around us, we can expect to see increased penetration of new payment solutions. It might have taken the pandemic for some consumers and small businesses to make the leap to contactless payments, but we can expect to see this shift in behaviour take hold, even as we revert back to normal. We’re only seeing the start of the contactless revolution. The payment solutions that are accessible to all will have the power to scale with ease and will see the biggest success. That’s where the real innovation lies.