The evolution of mobile payments

Claire Maslen at the Mobile Ecosystem Forum describes how the mobile payments industry will evolve over the next 12 months

 

In the telecoms sector, the convergence of different commerce transactions like Direct Carrier Billing (DCB), Mobile Money, and mobile Point of Sale (mPOS) creates a versatile and robust payment ecosystem. Each of these transaction types offers unique benefits and collectively enhances the financial inclusivity and service offerings in the telecom industry.

 

There’s no question the payments horizon is interesting and evolving with more activity forecast. There are a few key areas to keep an eye on as we move ahead with the year.

 

Reliability

Let’s start with the plumbing and the pipes that we seem to take for granted; infrastructure. 

 

Irrespective of what demands are coming over the horizon, reliability and resilience in our payment infrastructure is a must. Many of the use cases and benefits we’re about to experience are reliant on initiatives such as real-time payments (RTP). As soon as mobile became a thing, we became impatient. We want the immediacy that mobile has afforded us, all with a few clicks or swipes. We need a communications network with five 9’s uptime, and we need a payment network to match. 

 

It’s becoming more common to hear of a retailer’s payment network going down – and we’ve even seen card networks fall over … is that down to a software update or simply an overload now everyone is making more and more transactions digitally? Either way, perhaps the payment networks can reflect on how the mobile industry has always insisted on testing, testing, testing. 

 

The UK Payment Services Regulator isn’t ignoring these failures. Somewhat timely, they’ve announced an investigation into the performance and management. If everything goes digital, we need to know it will work. 

 

Digital currencies

We can’t talk about advances in Payments without mentioning Central Bank Digital Currencies (CBDCs). 

 

Despite consumer concerns around privacy, security and resilience, this area is expanding and has the potential to transform the global financial system. 19 of the G20 countries are now in advanced pilot stages and The Bahamas, Jamaica and Nigeria have fully launched their CBDCs. 

 

BIS Innovation Hub has successfully completed a trial exploring the cross-border implications, involving multiple markets. Be it consumer or wholesale use cases, the need for clear and transparent communications from all central banks will be essential in helping to encourage adoption and develop trust with consumers.

 

Social commerce

The term Social Commerce has been creeping in to our vocabulary over the past couple of years. Following my favourite influencers, I can see what my tribe is endorsing, and then with a click or a swipe, I can select an item and complete the purchase through whatever platform I’m on. Sounds great. But this is not without problems. 

 

Unfortunately, one of the fastest growing areas for online fraud is driven through these social platforms. With fake accounts, fake reviews, fake products, it’s hard to know who we’re supposed to be buying from. This plays into the debate for online and physical identities. Identity of people, of businesses and of things. Maybe another argument for wallets.

 

Artificial Intelligence

Artificial Intelligence (AI) is here. Many businesses are using AI internally for predictive analysis to help route payments, monitor cash flow patterns and identify fraud, or for improved customer support with virtual assistants and chatbots, taking the load off humans. Saudi Arabia has just announced the intention to create a huge fund with A16Z.

 

But what happens when AI is in the hands of the consumer? Imagine your wallet being smart – a wallet which can nudge you in the right direction to use a particular payment method, in a particular merchant; or a wallet that gives basic financial advice on money management as you roll from one paycheque to another. For me, this is one of the most exciting developments.

 

But it’s not without challenges. Could we see consumer AI wallets, conflict with merchant payment orchestration? I think there is a potential for tension here and unless this is clearly defined, it could just switch everyone off even bothering to use the tech that is available. 

 

Wallets

Finally, I want to expand the topic of digital wallets. What we’re seeing and using today, certainly in the west, is merely card emulation. It’s nothing particularly smart (not taking away from the underlying tokenisation which makes for a more secure experience). But there’s no major benefit to me and there’s nothing particularly smart. 

 

The COVID19 pandemic moved many people from cash to digital, and from cards to digital wallets. But what else should we look for in the evolution of wallets? Well of course a wallet should resemble our existing physical purse or wallet. And, of course, payments and money, are placed at the heart of that.

 

However, why don’t we start to think about wallets as personal vaults that hold all manner of information relating to me? Payment cards, loyalty cards, identity documents for sure.

 

But what about our vaults really being the entry point to our digital persona? I don’t need to carry my passport around with me and share all that information, just to prove my age (sadly that’s a bad example for me personally given my aging years). If I can insert ‘anchor’ credentials into my wallet/vault, and securely share the credentials that are relevant to the scenario I’m in, then that would add real value to me as an individual.

 

And if I can wrap everything up with biometric security, that makes for an easy and secure, user experience. 

 

Smarter experiences

As consumers take steps towards smarter experiences, it’s important we look to the infrastructure players and technology providers to design responsibly and reliably, and the regulators to enforce the legislative measures to protect individuals and businesses alike.

 

I’m looking forward to being nudged in the right direction by my personal AI, being prompted to use a card product in a particular scenario that serves me best, and being able to share what credentials I want, rather than sharing everything with everyone, every time. The demand ultimately sits with the consumer. 

 

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Claire Maslen is Payments and Commerce advisor at the Mobile Ecosystem Forum, a global trade body focussing on cross-industry best practices, anti-fraud and monetisation

 

Main image courtesy of iStockPhoto.com and jacoblund