Connected Devices are Opening Up New Forms of Payments and Partnerships
Of all the trends that are currently shaping – or re-shaping – the nature of payments, none is more significant than the rise of the Internet of Things (IoT). We often talk about the payments ‘ecosystem’ and the complexity that exists between the many participants that are part of this ecosystem, but this complexity will expand exponentially as millions – no, billions – of devices become internet capable.
And just as the internet itself provided the spark for new ways to pay, the explosion in the number of connected devices is going to create space for new forms of payment and new partnerships within the payments ecosystem.
The proliferation of connected devices (estimated at nearly 21 billion by 2020 1) is an external market force. It is not coming from within the payments industry, but this external pressure is already showing its disruptive potential. It is responsible, at least in part, for the push to modernize restrictive legacy systems, to apply big data to payments and banking, and the ongoing shift to the cloud. Payment security is also transforming, with biometrics and digital identity just some of the areas being addressed.
In some cases, this reaction is led by incumbents acting to protect their market share, but there are also new entrants emerging who are not constrained by legacy infrastructure or cumbersome processes, and can move quickly to capture market share.
Open APIs are the key to unlocking innovation
The key to success for many of these new entrants, as well as incumbents, will lie in their ability to harness and utilize open APIs (application programming interfaces). APIs have the potential to bring order to an increasingly complex and multi-layered digital world. They open up new forms of partnership that couldn’t exist in a legacy platform world. And they will be the key to payments’ role in the IoT. The average consumer already interacts with APIs dozens, if not hundreds of times every day, as they engage with Twitter, Google, Facebook, eBay, Amazon, Netflix and many other digital champions.
These companies have been successful in ‘opening up’ by providing a standard interface, which is accessible to third parties, whilst retaining the necessary control (especially to avoid fraud and access by illegal third parties. However it is the potential of APIs to unlock innovation that will put them at the center of the new payments ecosystem.
On the technical side, it is the ‘any-to-any’ capabilities of APIs that can unlock new innovation, as a technical integration point for payments methods and card schemes, merchant acquirers, and a growing number of payment channels. Importantly, APIs also open the door to new types of partnerships, which may well be the differentiator.
Now while I would not recommend burgers for breakfast or a steady diet of french fries, the fast food sector is presenting some interesting IoT use cases. Combining in-car ordering, beacon technology to detect the approaching customer, existing drive-through infrastructure and payment, the elements are in place for new, frictionless payments experiences. In fact, the connected car is likely to be a bellwether for the Internet of Things generally. So my advice? Keep your eyes on the road…
Wolfgang Berner will be joined by Mark Ranta at Merchant Payments Ecosystem 2017 to jointly deliver a keynote address that will discuss in detail how open APIs how they unlock innovation in the payments and banking space.
Related Blog Posts
Slam the Brakes on Gas Pump Fraud and Rental Car Scams This Memorial Day Weekend
The process of secretly reading data off credit and debit cards (aka skimming) could be netting criminals as much as $3 billion a year in the US, according to Bankinfosecurity.com.
As we look forward to Memorial Day weekend here in the U.S., travelers are getting ready for road trips to their favorite destinations. Whether it’s a beach party in Miami, snorkeling in Catalina Island, or even a staycation, payments – and more specifically, payment fraud – is a huge consideration for travelers, especially during the holiday weekend. I sat down with one of our payments fraud experts, Seth Ruden, to talk about what travelers must look out for regarding payment fraud and how they can keep their money safe. Here’s what he told me.
Cutting the Cost and Complexity of Merchant Payments – But Not the Customer Experience
New research from ACI and Ovum, released this week, highlights that many merchants in 2018 are investing in creating operational efficiencies in their payments systems. But the question is, as they strive to simplify systems and cut costs, will customer experience suffer?
Despite the Hype, Machine Learning, Models, Behavioral Profiling and the Customer Experience are Still Fundamental
Think about the last time you got a fraud decline. Where were you? In the grocery store? Buying airline tickets? On holiday? Shopping in the same place you’ve been a dozen times, but across the border? How frustrating was that, what did it do to your perspective, your mood, your confidence in your financial institution? This can be embarrassing and inconvenient, stressful and alarming for the consumer. There are few things that can be more disruptive in our day-to-day lives then the lack of access to your funds, or the care taken by your financial institution after a fraud occurs. According to ACI’s Global Consumer Fraud Survey, 20% of people may decide this is too much and move along to another financial institution.
Cross-Border eCommerce Expansion: A Fraud Perspective
For merchants that are expanding their online presence overseas, enabling the right locally-preferred alternative payment methods and connecting to local acquirers can be a critical determinant of success. But without considering fraud management strategy in tandem with payments strategy, the road to cross-border success could be a bumpy (not to mention costly) one.
The 12 Biggest Security Threats to Payments
Consumers ask a lot of you in terms of convenience, speed and, above all, security. This puts the pressure on you to offer a pain-free consumer experience that is also highly secure. And when you accept payments, you need to secure all parts of your organization. Here’s an actual example: one major breach occurred when an air conditioning vendor was hacked, allowing hackers to access the corporate network and finally the point of sale network. This highlights the importance of understanding the threat landscape we face today.
Maintain Vs. Invest: What the Digital Era Ushers in for Banks
Taking place this week in Brussels, the European Credit Research Institute (ECRI) will host a high-level debate on how policymakers can build on the process of digitalisation of banks to raise competitiveness in light of increased competition from fintech start-ups and tech giants.
Ursinus College: The Future of Campus Commerce is in the Cloud
Sixty-eight percent of schools are moving eCommerce to the cloudi. As Ellucian Live begins to descend upon San Diego this week, ACI’s Gene Scriven took a moment to chat with Ellen Curcio, Director of Student Accounts at Ursinus College, about the future of campus commerce.
Be sure to catch Ellen and Gene, as well as ACI partner and host Ellucian at the event on Wednesday, April 11, for a panel discussion on “The Future of eCommerce in the Cloud.”
Fraud Awareness Month Canada
A couple years ago, I penned a blog post to commend the Canadians on what made their culture so resilient to fraud that it developed the lowest fraud rates in the Northern Hemisphere. It got a bit of circulation and created significant positive feedback. This time, I would like to bring awareness back to Canada about a potential threat as it relates to the increasingly popular Tap payment channel.
Telcos Have a Unique Opportunity to Drive Mobile Payments
We are witnessing a significant and inevitable shift in digital payments towards mobile commerce. In the next ten years, we will see an exponential expansion in the number of devices and applications we will use to make mobile payments. You could pay for your groceries on your mobile, for delivery at home, then two days later receive a message from your fridge alerting you that the milk is running low. By the time you get back home, a new bottle of milk could be waiting for you, thanks to real-time delivery, even by a drone.
Securely Growing Online Sales in 2018: An Australian Perspective
Back in November 2017, I participated in a panel discussion for NORA (National Online Retail Association), where I looked at fraud trends in Australia over the previous holiday shopping season and made predictions to help retailers prepare. Now looking back, I am sorry to say that my predictions were painfully accurate.