Navigating Digital Payments

A comprehensive analysis of key payment trends, viewed thorough the perspective of how they will shape customer experiences in the future.

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Staying ahead of the curve: navigating digital payments.

In this report, we share our vision of how payments will look in 2030. We explain the ongoing duality between increasing complexity of the payment landscape and consumer expectations for simple and seamless payment experiences.

Businesses everywhere will need to bridge this gap. Doing so, will require great skill, ingenuity, innovation and technical know-how. These trends will bring a changed world. Orders will be placed and paid for autonomously. New business models, digital currencies and traceability solutions will enable greener solutions. And the fight against fraud and counterfeit goods will enter new realms. These changes will be powered by AI-based hyperautomation and data-sharing, which will be enabled through privacy-preserving technologies to ensure security and trust.

This report explores the key topics where significant changes are expected in the medium term and where Worldline believes businesses need to start their preparations now. As the European leader in the field, understanding the complex payment landscape is Worldline’s day to day business and we continually find innovative ways to help our clients deliver the best possible experience to their customers.

We hope that you will enjoy reading this edition of Navigating Digital Payments.

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Reshaping customer experience by simplifying complexity

We believe that successfully delivering a great Pay-Xperience will increasingly depend on simplifying complexity: managing diversification, digitalisation and regulation, to provide trusted, seamless and unified payment experiences.

To help understand this interaction between simplicity and complexity in payments, we have identified three axes of duality.

We do not see these as a battle between good and bad. Diversification, accelerated digitalisation and regulation may add complexity, but they are all stimulating innovation, providing consumers and merchants with greater choice, and enabling new solutions and business models. The goal should not be to avoid or eliminate them, but rather to leverage them as springboards for driving simplicity in payment experiences.

Along each axes of duality, we have identified key topics where there will be changes and challenges.

We hope that these insights will help you to think about how your business and market will change in the coming years, and how you can successfully deliver a great experience to your customers with a perfectly complementary built-in payment experience.

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A glimpse into the future

Will orders be placed and paid for autonomously? Will digital currencies become more widely accepted than cash? How will we travel, shop and socialise? By looking at how the trends identified in this report will interact and converge, we can imagine how payments will impact our world over the next decade.

Learn more about our vision for payments in 2030

Pay-Xperience is critical to customer experience

All businesses need to collect payment for the goods or services that they sell. Therefore, the experience they provide for accepting payments forms a key part of the overall customer experience they offer. We call this the Pay-Xperience (or PX). A slow, difficult or jarring PX will negatively impact the overall customer experience and can lead to a customer abandoning their purchase altogether. A fast, easy and frictionless PX will positively support the overall customer experience, leading to higher conversion rates, increased repeat business and improved customer perception. However, providing a natural PX is not straightforward. The challenges of a complex payment landscape have to be managed to provide simplicity at the point of use.

Learn more about the future of customer experience

Unification Taming Diversification

Never before have there been so many possibilities for how people can pay. The long-standing options of cash and cheque have been joined over the years by debit and credit cards, pre-paid cards, online bank transfers, direct debit and, more recently, digital currencies (with already over 100 digital currencies having a market capitalisation of over $1 billion^[1]). The options for how these payment means can be triggered has also expanded. Physical cards, e-wallets, pay-by-link and QR-codes are just some of the different ways that users initiate payments today.

The number of companies offering payment related services has also grown. Once the preserve of a handful of highly regulated institutions, the financial sector now has many disruptive players, with the number of FinTechs worldwide continuing to grow and reaching over 25,000 this year^[2]. Many are applying new technologies to old problems and testing disruptive business models.

The scale of diversification is immense; the challenge is how to unify it.

Collaboration between the different members of the payments ecosystem will be key, and this will depend on interoperability.

New Business Models

With the shift towards servitisation, pay-as-you-use and pay-for-outcomes, many businesses will have to adapt their business and operating models to match consumers’ expectations. Fintech 2.0 will bring major changes, with the most significant successes coming when incumbents and new entrants combine forces.

Learn more about New Business Models

Digital Currencies

Digital currencies, whether public or private, can provide attractive alternatives to fiat money for certain use-cases. However, businesses face the new challenge of identifying which use-cases will deliver the greatest impact for them.

Learn more about Digital Currencies

Context Aware Services

The rapid growth of available data sources will demand responsibility, relevance and quality from AI-based automated decisions, maintaining ownership and confidentiality of data and ensuring fair and loyal decision-making by autonomous processes.

Learn more about Context Aware Services

Green Payments by Design

The digital world represents a 7th continent in terms of water and energy consumption. Actions are needed to reduce its footprint. This also applies to digital payments. An effective reduction of the environmental footprint of payments can only be achieved by working across organisations and taking a full end-to-end life cycle assessment approach.

Learn more about Green Payments by Design

Seamless Interactions Amidst Accelerated Digitalisation

The Covid-19 crisis has accelerated digitalisation^[3]. In retail, we have seen shops with little or no online presence implement online commerce, including options like click-and-deliver, click-and-collect and live-stream-shopping. Banks have had to move entire call-centres into a home-based mode of operation.

Alongside this, technology has continued to advance. Artificial Intelligence (AI) is being used to automate tasks that previously would have required human intelligence, and it is now being applied at scale and to a wider range of use-cases^[4] The growth of the Internet of Things (IoT) is continuing to surge, enabling a vast array of new solutions^[5].

The technological landscape is increasingly convoluted; the challenge is how to make the experience seamless for end-users.

With this trend towards seamless interactions, users will be able to switch channels so easily that they will no longer even notice it. An interaction via a chat-bot could switch seamlessly to a call with a live operator. A shopping cart could be started in a browser, added to via a mobile app, and completed in-store. A return and refund could be completed at the same time (and same place) as a new purchase.

Digital Theft and Fraud

Increasing digitalisation is raising the threat of cyber-crime. Machine Learning techniques and technologies such as quantum computing and homomorphic encryption will play a critical role in fighting fraud in the future.

Learn more about Digital Theft and Fraud

The Digital Divide

A more nuanced, less binary digital divide will continue to exist, challenging organisations to make their solutions more digitally inclusive. Appealing to the next generations will rely on delivering digital solutions that meet their wants and needs for sustainability, ethics and accessibility.

Learn more about The Digital Divide

The Renaissance of Physical Stores

The digital transformation of physical stores will intensify in order to offer a unified digital experience in-store. This strategy will enable retailers to drive new personalised services and immersive experiences across every channel, unlocking new sources of revenue.

Learn more about The Renaissance of Physical Stores

Autonomous Payments

Driven by advances in IoT devices, AI and blockchain, autonomous payments will offer merchants innovative business models, in both the sharing and circular economies through pay-per-use models. However, the future of autonomous payments will be closely related to consumers’ willingness to provide more of their data in exchange for a reduction in payment friction.

Learn more about Autonomous Payments

Implicit Trust From Regulations

The changing regulatory landscape provides an insight into what governments are prioritising for the future as they seek to represent their citizens. We see that sustainability, protection, sovereignty and innovation are currently the key drivers for governments around the world.

Payments is a highly regulated industry. Of course, compliance with regulations is mandatory, but businesses that focus only on maintaining this compliance may be missing out on the opportunities that many regulatory changes create.

Understanding the details of the multiplicity of payment regulations is essential; the challenge is how users can implicitly trust every transaction.

Trust underpins all transactions. It is conditional on all parties involved in the transaction having confidence that the outcome will match their expectations (or they will have some recourse to resolve any issues that do occur).

Consumers must be able to trust that when they purchase goods they will receive them; if half of the orders they place are never delivered, they will most likely stop purchasing from that vendor, even if refunds are provided.

Merchants must trust that they will receive the money that consumers pay them; if too many transactions do not arrive or are for the wrong amounts and require manual intervention to resolve, then they will look for alternative ways to collect their income. Merchants also need to be able to trust that, for example, someone is above the legal age limit for buying certain goods (e.g. alcohol).

With accelerated digitalisation, more and more data is being collected about individuals and companies. Every transaction generates a huge number of data points. With this state of affairs, there is a need for trust that the data will be stored securely and not misused.

People also want to know that claims about the provenance or sustainability of products and services they are offered are factually correct.

Governmental Priorities

Governments will increase their focus on sustainability, protecting citizens and businesses, securing sovereignty and stimulating innovation. This will require businesses to adapt to new standards, opening up more systems and sharing more data.

Learn more about Governmental Priorities

Privacy

With people’s lives being increasingly online and digital, security and privacy of their personal information will need to be guaranteed cost-effectively without harming the end-user experience.

Learn more about Privacy

The Data Economy

The arrival of the data economy is being enabled by new regulations and technologies and will bring opportunities for businesses that understand how to share and leverage data.

Learn more about The Data Economy

Counterfeit Detection at Scale

Counterfeit detection will allow consumers to trust the products they are buying, including online, where the use of NFTs to provide a proof-of-ownership for digital assets is gaining momentum.

Learn more about Counterfeit Detection at Scale

[1] https://coinmarketcap.com/all/views/all/ accessed on 6/9/2021
[2] https://www.statista.com/statistics/893954/number-fintech-startups-by-region/
[3] the-world-after-covid19-white-paper.pdf
[4] hyperautomation_in_payments.pdf
[5] Download-autonomous-payment

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