Seamless and invisible: the future of autonomous payments and their implications | Blog
01 / 11 / 2022
In recent years, more and more everyday devices have evolved into smart, internet-connected utilities. A vast range of items is now connected, from household items such as thermostats, refrigerators and lights, to larger infrastructure, including public and private transport, sustainable buildings and public utilities. This, alongside the rise of artificial intelligence (AI) and the rapid adoption of electronic payments, has opened the door for an even more inter-connected and payment-fluid age. Through autonomous payments, devices can automatically make payments to other devices, organisations, people and businesses. But what does this mean economically and socially? Will this usher in a new age of customer experience and financial autonomy?
Minh Le, Head of Connected Vehicle & IoT Service Offerings and a Member of the Worldline Discovery Hub, shares his thoughts on the social implications of autonomous payments.
Could you give us an overview of autonomous payments, and some of their potential benefits?
There is, to my knowledge, no official definition of autonomous payments. However, for me, the working definition of ‘autonomous payments’ are payment transactions triggered by The Internet of Things (IoT) devices or software agents with a certain degree of autonomy. The degree of autonomy can range from very basic pay-per-use; think of a washing machine, where payment is made automatically after each use, to fully autonomous; think of walk-in/walk-out a store where payments are handled entirely in the background in a frictionless and invisible manner.
One of the hot topics that the automotive industry is currently looking for is in-car payment, in which cars can handle payments automatically for tolling, parking or charging an electric vehicle. For example, at the moment, the driver of an electric vehicle driving from Norway to Lisbon may have to use 15 different charging cards during the journey. This is what we want to remove for the consumer by creating seamless, frictionless payment methods. In this example, a single payment solution can be used to pay, increasing efficiency and making the journey simpler.
If you look at the consumer side, using autonomous payments will help remove a lot of the hassle that exists with low-value payments. For instance, if you park somewhere in a city and then leave, that payment should be as seamless and frictionless as possible. They also reduce stress for consumers, as they do not need to worry about how they need to pay for particular facilities or services. Transaction times are reduced, saving the consumer time.
On the merchant's side, autonomous payments may create new opportunities. If you look specifically at IoT payments, they all have to do with the combination of contact awareness. The question is, how do we use the data surrounding or collected by the device to facilitate the payment. So, if there is consumer consent to provide that data to the merchant, then the merchant can, in turn, use this to create an entire branch of new business and customer experience. By embedding automated payments into their value propositions, businesses can create truly innovative, end-to-end solutions for their clients.
Using autonomous payments can also reduce administration costs and improve use of resources for merchants by minimising the number of required payment terminals or even lowering necessary staff levels in specific environments. This move towards invisible and frictionless payments may also lead to higher conversion rates and increased revenues for the merchant and could encourage repeat custom and better brand loyalty and trust.
Embedded payments and automated processes undoubtedly bring social and economic implications. How do you see this unfolding?
I think a matter of concern relates to financial inclusion. Today, we are moving toward a cashless society. Still, we cannot exclude a group of people who are unable or even unwilling to use autonomous payments or move away from a cash society. This may be partly due to their inability or unwillingness to adopt new technologies. There must be education around new technologies, including much-needed awareness of security aspects, such as fraud and the protection of one's data. We must also be aware of generational, economic, and cultural differences that may impact the uptake of autonomous payments.
Another implication is data privacy, as autonomous payments are based on contextual awareness. Consumers' private data should be only used with the user's consent. A good example is Amazon Go, where you could walk in, select your desired products and walk out. The payment is made automatically. The merchant must appropriately process all data collected by many cameras in the shop and comply with data protection regulations such as GPDR and PSD2 when offering similar service in the EU. This also extends to all other data collected from the consumer's bank details, merchant accounts and personal devices.
A further consideration is that autonomous payments would be 'invisible'. There is a specific element of trust here - the consumer must trust that their data are secure and that payments made are correct. This could unintentionally create a new field for harmful agents, such as fraudsters and hackers.
When it comes to payment, everything must be and is regulated. For autonomous payments, regulations concerning fraud, security and data privacy must be finalised and solved. It is becoming more critical to assess these aspects. With autonomous payments, it all comes down to trust. How can I trust a device that will pay on my behalf as a consumer? So it's a trust issue that must be solved, and trust is linked to data protection and privacy and protection against fraud.
Device securities must also be assured through strict regulation. The entire process must be effective, efficient and safe. Accountability is key. The process may be supported by AI and programming languages that power the devices or software, but ultimately, an individual, organisation or business has to be accountable for the payments and correct process.
Can autonomous payments positively impact sustainability?
Certainly. As discussed previously, autonomous payments can directly support sustainable infrastructure, such as electric vehicles. By focusing on digital payments and invisible payments, energy usage can be minimised and offset through renewable energies. Currently, sustainability isn't a key focus of developing autonomous payments. Still, their broad benefits can certainly be applied to building sustainable infrastructure, business approaches and customer benefits. Autonomous payments form part of an approach to our future, both socially and economically, that focuses on accessibility, accountability, experience and, with time, sustainability.
How do you view the future of payments? Are autonomous payments likely to replace other forms of payment?
The payment solution landscape is moving very fast thanks to emerging technologies such as AI, blockchain, cloud computing and the evolution of IoT devices. I foresee the future of payment moving from standard payment methods to frictionless and then invisible payments where both consumers and merchants' benefit. This will result in a positive effect on the (cashless) society as a whole.
However, I do not believe autonomous payments will replace other forms of payment entirely. The idea behind autonomous payments is to provide an efficient and seamless payment experience. Thus, by offering autonomous payments alongside a portfolio of other methods, businesses and merchants can provide enhanced customer experiences and give their clients and consumers more options which suit them best.
While there are many benefits to invisible payments, such as those seen regarding sustainability and business costs, autonomous payments, at this moment, should be considered an effective, highly efficient and seamless alternative payment option, albeit a costly investment. However, this view will likely change as uptake increases and integration improves.
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