The Invisibility Cloak of Payments: What Are the Consequences?
If you could pick any superpower, what would you pick? Children often pick "invisibility.” Oh, the possibilities of being invisible! What fun! You can walk into a candy store and take all the candy you want, you can stay downstairs late with your parents and listen to what they’re saying, you can sneak out without anybody noticing… But when you think about it, there are also disadvantages that come with this superpower.
When you look at payments, we’ve been on a transformational path to integrate it more and more into the customer journey. Consumers have their monthly subscriptions to Apple Music, regularly take an Uber or use Deliveroo to the extent that they don’t have to think about the transaction. These types of payments have also been replicated in the physical world, with consumers using contactless cards and wearables to pay for goods and services. The result is a fantastic, frictionless user experience.
Now, imagine a world where payments are entirely invisible. You go out for dinner with friends, have a lovely meal and leave – without having to wait for the bill. Need your car repaired? You drop it off, they fix it, you leave and it’s all paid for invisibly. Wonderful, isn’t it?
New and established companies alike are investing heavily in innovative payments technology, with everything pointing to invisible payments being a key feature of future innovations. But, what are the advantages and disadvantages of invisible payments for the four-party model.
How little friction is too little?
Let’s start with consumers. As mentioned earlier, invisible payments are fantastic for the user experience. For the consumer, purchasing goods and/or services with just one click or tap makes the payment such a natural part of the journey that it is almost unconscious. On the surface, this is fabulous, but we need to be mindful that when the payment happens unconsciously, you can easily overspend. This can cause short-term problems for an individual, but in the long term it could lead to a cultural problem where people are less financially savvy and liable to build up debt.
For merchants and corporates, invisible payments are likely to ensure higher transaction volumes and reduce cart abandonment. This sounds fantastic, but if your consumers are feeling negative because they unconsciously spent more than they intended, this could lead to buyer’s remorse. In some cases, this will lead to them returning the item, or even placing blame on the merchant or corporate. This is a significant disadvantage to merchants and corporates, as it could lose repeat customers or even cause reputational damage.
For acquirers, the easier a payment becomes, the greater the volume of payments, and the more money acquirers make! Also, by providing seamless, integrated payment services to merchants and corporates, you become a trusted and valuable partner. However, the drawbacks for merchants can rub off on the acquiring side too. Most people today have heard nightmare stories of where a child has run up huge bills on a parent’s credit card through online gaming add-ons! The resulting payment cancellations are costly to rectify, and the potential reputational damage can be very high!
Looking at card issuers, they want to provide innovative payment methods that enable easy and effective movement of money. A happy customer is a loyal customer, and that has huge advantages. But, a consumer’s relationship with their bank can be difficult, and if the consumer feels as if they haven’t been protected from overspending, they will potentially place blame on the bank, rather than the merchant. The most frequent interaction a consumer has with their bank is through payment, so if the payment becomes completely invisible, so does the brand! Could the invisibility cloak become too effective, so that the bank’s brand differentiators are forgotten?
What should you be doing to keep the invisibility game fun?
There are two key things the industry can do to maximize the invisible payments superpower. On the merchant side, once the payment has been completed, the customer should receive an automated message or email thanking them for their purchase. This not only reminds the consumer of their spending, but retains an open two-way conversation between consumer and merchant, which can have positive benefits for the brand.
Furthermore, issuing banks could build spend management tools into their mobile banking applications, including alerts that follow multiple or high-value transactions. The consumer should have the ability to personalize their limits and alert types. These interactions could strengthen the relationship between bank and customer.
By incorporating easy-to-use, fun, conversational links from both the issuing side and the acquiring side of the relationship, it is possible to deploy those invisible payment superpowers… while acknowledging that with great power comes great responsibility!
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